With the government shutdown entering its fourth week and with no end in sight, a number of federal agencies are feeling the pressure. The Department of Commerce and the U.S. International Trade Commission have been effectively shuttered for the past four weeks and recently the Office of the U.S. Trade Representative released a short statement indicating that they had begun furloughing nonessential personnel. A number of other agencies and departments have also had their work affected or completely suspended. Outlined below is a brief analysis the current shutdown is having on those federal agencies which are critical to imports, exports, and international trade.
Most agencies of the United States government, including the Federal Maritime Commission (”the Commission”), have been closed since December 22, 2018. Since that date shippers, ocean common carriers, and non-vessel operating common carriers in their shipper role have not had access to SERVCON, the service contract electronic filing system of the Commission. So how is it intended for these supply chain players to adhere to Commission regulations related to initial or service contracts about to be renewed, or amendments to existing service contracts during this dysfunctional period which at this point hasn’t shown even a hint of an end game? Short answer: the same as always, but without the filing obligation nor risk of sanctions (penalties). The filing requirement is temporarily lifted. Therefore, service contract activity can continue as usual without concern of penalties. There are some caveats though. Continue Reading U.S. Government Shutdown: The Impact on Federal Maritime Commission Service Contracts
Venezuela recently initiated a World Trade Organization (“WTO”) complaint against U.S. sanctions, claiming that the United States has “imposed certain coercive trade-restrictive measures on the Bolivarian Republic of Venezuela in the context of attempts to isolate Venezuela economically.” The same day, the U.S. imposed additional sanctions on Venezuelan nationals and entities allegedly engaging in corrupt currency exchange transactions (see our previous post here).
The WTO will now begin consultations, during which the parties will have an opportunity to resolve their dispute without entering into litigation. If the parties cannot reach an agreement within 60 days, Venezuela may request adjudication by a dispute settlement panel. It remains to be seen whether the WTO dispute settlement system will be of any assistance to Venezuela in light of predicted paralysis in December 2019 when two of the three current WTO judicial appointments are set to expire. To date, the United States has refused to entertain any appellate body appointments due to concerns that the current members have strayed from their original mandate.
Husch Blackwell’s Export Controls and Economic Sanctions team continues to monitor all matters related to sanctions as they develop and will provide updates and analysis as new information becomes available. Should you have any questions, please contact Cortney Morgan, Linda Tiller, or Grant Leach.
Today, January 8, 2019, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added approximately 30 individuals and entities to its Specially Designated Nationals and Blocked Persons List (the “SDN List”) due to their engagement in corrupt currency exchange transactions which enriched themselves by at least $2.4 billion at the expense of Venezuela’s citizens. These sanctioned persons include two former Venezuelan National Treasurers – Claudia Patricia Diaz Guillen (“Diaz”) and Alejandro Jose Andrade Cedeno (“Andrade”) – who authorized a Venezuelan businessman named Raul Antonio Gorrin Belisario (“Gorrin”) to convert Venezuelan bolivars into U.S. dollars at highly favorable exchange rates at currency exchange houses under his control. Gorrin then shared the resulting excess currency conversion profits with Diaz and Andrade by engaging in deceptive practices to purchase a wide variety of properties, aircraft and other luxury assets on behalf of Diaz, Andrade, their family members and their other business associates. The Treasury Department published a diagram which explains the scheme in further detail. Continue Reading OFAC Announces New Sanctions Related to Venezuela
On September 22, 2018, Bill (SB-1402) was signed into law in California to become effective January 1, 2019. That law makes “Customers” (generally shippers, exporters, importers, and ocean intermediaries, FMCSA Property Brokers) that engage or use “a port drayage motor carrier” jointly and severally liable with that port drayage motor carrier if that carrier is listed on the Internet Web site maintained by the California Division of Labor Standards Enforcement. This ominous list now identifies port drayage motor carriers which have been found liable to a “port drayage driver” for unsatisfied court judgments, assessments, orders, decisions, or awards, for port drayage services performed for which the drivers have not been paid or expenses for which they have not been reimbursed, plus damages, penalties, and interest. The California Labor Commissioner’s Office, Division of Labor Standards Enforcement, has awarded in excess of $45 million in unlawful deductions from wages and out-of-pocket expenses to more than 400 drivers, and the California Labor Commissioner’s Office noted that drivers have seen little of those awards. Continue Reading California Labor Commissioner Lists Port Trucking Companies Which Can Result in Serious Penalties to Shippers and Others
On December 28, 2018, the United States Trade Representative (“USTR”) published in the Federal Register the first notice granting product exclusions for specific products from the Section 301 tariffs subject to an additional 25% duty effective July 6, 2018. The exclusions apply only to the $34 billion worth of Chinese tariffed products from Tranche 1. These exclusions will extend for one year from the date of publication of the notice. Continue Reading USTR Grants First Round of Product Exclusions
On December 19, 2018, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department took multiple sanctions actions related to Russia:
Proposed Delisting of En+ Group, UC Rusal and ESE
OFAC notified Congress of its intent to remove En+ Group plc (“En+ Group”), UC Rusal plc (“UC Rusal”) and JSC EuroSibEnergo (“ESE”) from its Specially Designated Nationals and Blocked Persons List (the “SDN List”) within thirty (30) days from December 19, 2018. OFAC first added these companies to the SDN List in April 2018 when it imposed sanctions on Oleg Deripaska due to his status as a senior Russian government official. OFAC added these three companies to the SDN List because Deripaska was the majority owner of En+ Group (which, in turn, was the majority owner of both UC Rusal and ESE). Under OFAC’s 50% ownership rule, these sanctions also extended to any subsidiaries in which En+ Group, UC Rusal or ESE held an ownership interest of 50% or greater. Continue Reading OFAC Announces Multiple Changes to Russia Related Sanctions
With the year winding down, we have prepared a comprehensive timeline and summary of the tariff actions of 2018, including the Section 232 steel and aluminum tariffs and Section 301 tariffs on China. We have also provided information on retaliatory tariffs imposed on the U.S. by other countries during this same timeframe. Continue Reading The New Era of Tariffs: A Section 232 and Section 301 Timeline for 2018
On December 14, 2018, the Office of the United States Trade Representative announced that they would be postponing the date on which the rate of additional duties would increase to 25% for the products covered under the third phase of Section 301 tariffs covering $200 billion worth of goods currently subject to 10% tariffs Continue Reading USTR Announces Delay in Increase of Section 301 List 3 Duty Rate