Doubts over the progress of negotiations between the U.S. and China have been raised today as President Trump announced that the U.S. has not agreed to roll back tariffs as part of an agreement to end the trade dispute, contradicting statements from China’s Ministry of Commerce and several news reports. Based on recent news reports, it appeared that the United States and China had agreed in principle to gradually reduce and eliminate tariffs that have been imposed by both countries in an effort to relieve to markets beleaguered by the global economic slowdown.

In prior negotiations, China demanded that all new tariffs authorized by President Trump be eliminated prior to making any concessions. However, no official agreement to bring an end to the trade war between the U.S. and China has been signed yet. That is expected to occur sometime in November, though the time and location of the signing is still to be determined.  President Trump and Chinese President Xi Jinping were originally intending to meet at the Asia-Pacific Economic Cooperation (APEC) summit in Chile, which was abruptly cancelled by the Chilean government due to the civil unrest there.

At the time of this post’s publication, there is only speculation as to how extensive the roll back of tariffs will be and which of the United States’ tariff actions will be included in “phase one” of the agreement. Phase One, expected to be signed within the next few weeks, could include eliminating September’s 15% Section 301 List 4a tariffs as one of the terms. It is also likely that Phase One of the interim truce will include an agreement to eliminate the upcoming 15% tariffs on List 4b, which are currently scheduled to take effect on December 15, 2019.

We will continue to monitor this situation and will provide future updates as additional details become available.  In the meantime, please contact Husch Blackwell’s International Trade and Supply Chain team for more information.

On November 1, 2019, Commerce announced in the Federal Register the opportunity to request an annual administrative review for products that are currently subject to antidumping and countervailing duties.  As part of this annual review process Commerce intends to select respondents based on U.S. Customs and Border Patrol (CBP) data for U.S. imports during the period of review. Any party wishing to participate in the antidumping and countervailing duty review process or who may be affected by duties on the products identified in the Federal Register notice should file a request for review no later than November 30, 2019.  In order to be eligible to participate in the review a party must either be an exporter or importer of the specific products and during the specific time periods identified in the Federal Register notice.

If your company or your suppliers are affected by these cases, please contact Husch Blackwell’s International Trade and Supply Chain group for assistance on how the annual review process works

In Husch Blackwell’s October 2019 Trade Law Newsletter, you’ll learn about the following updates in international trade and supply chain law.

  • The current and future status of the U.S.-Mexico-Canada agreement
  • Opening Day, start date and new list of excluded products for Section 301 List 4 exclusion process
  • ITC opens MTB process; petitions due by December 10, 2019
  • U.S. levies tariffs on E.U. imports over World Trade Organization’s Airbus decision
  • An update on U.S. Department of Commerce decisions
  • U.S. International Trade Commission – Section 701/731 proceedings
  • An update from U.S. Customs & Border Protection
  • Summary of decisions from the Court of International Trade
  • Updates from the Court of Appeals for the Federal Circuit
  • October export controls and sanctions

If you have questions about our October Trade Law Update, please contact a member of Husch Blackwell’s International Trade & Supply Chain team.

For the first time since China gained membership in 2001, the World Trade Organization (WTO) on November 1, 2019 authorized China to impose $3.6 billion worth of punitive and retaliatory tariffs on American imports.  The WTO ruled that U.S. antidumping duties on imports of Chinese steel were overinflated because the methodologies used by the U.S. in antidumping proceedings were inconsistent with WTO rules. WTO Arbitrators suggested that China could impose the countermeasures as early as this month.

The WTO decision was announced  as U.S. President Trump and Chinese President Xi Jinping plan to sign “phase one” of an interim truce in the trade war later in November at a venue that has yet to be determined, as the meetings scheduled for the Chile APEC summit were cancelled because of unrest. Though the $3.6 billion figure is a small fraction of the $75 billion in retaliatory tariffs China has already implemented, imposing these WTO-authorized countermeasures could be seen as an escalation of the trade war by the U.S. and could possibly delay progress on an interim deal.

According to the Financial Times, however, U.S. government officials in Washington, while disappointed by the WTO’s decision, believed that the ruling would not have an impact on the trade negotiations between the American and Chinese governments. The origins of this particular WTO case dates back to a Chinese complaint filed nearly six years ago to December 2013, long before the current trade dispute. The case is concerned with the methodology the U.S. used to calculate the antidumping duties, not the general trade policies the current administration has chosen.

We will continue to monitor this situation and will provide future updates as developments occur. Please contact Husch Blackwell’s International Trade and Supply Chain team for more information.

 

The process for filing exclusion requests for products on the Section 301 List 4  begins today, October 31, 2019 and ends on January 31, 2020 The Office of the U.S. Trade Representative (“USTR”) published the exclusion request procedures in the Federal Register on October 24, 2019.

Exclusion requests can be submitted via USTR’s portal at exclusions.ustr.gov. To be eligible for an exclusion, an importer must demonstrate that (a) there is an insufficient supply from U.S. sources; (b) the additional duties have caused severe economic harm; and (c) the imported good is not identified on the “Made in China 2025” list.  Exclusion requests are specific to products imported at the HTSUS 10-digit level and any request must clearly and succinctly identify the physical characteristics such that U.S. Customs can administer the exclusion.

USTR originally announced on August 6, 2019, that it would institute additional tariffs of 10% on approximately $250 billion dollars of imports from China identified on List 4A, but on August 26, 2019, it announced that the tariff rate would increase to 15% due to ongoing tensions and forestalled trade negotiations. Tariffs on List 4B are scheduled to go into effect on December 15, 2019. Importers should review both List 4A and 4B to identify and ensure that goods that it is importing are properly monitored.  For any importer interested in submitting an exclusion request, please contact Husch Blackwell’s International Trade and Supply Chain Team.

We will continue to monitor this situation and will provide future updates as developments occur. Please contact Husch Blackwell’s International Trade and Supply Chain team for more information.

U.S. Trade Representative (USTR) Robert Lighthizer and certain officials in the administration have expressed optimism about the future of the U.S.-Mexico-Canada Agreement (USMCA). Concerns are growing, however, about whether the intended overhaul of NAFTA will be ratified by the United States Congress.

On October 23, 2019, Senator Grassley, chairman of the Senate Finance Committee, stated that he had a “growing worry” about the current progress of USMCA and claimed that the Democrats are stalling in the hopes of stopping the deal. House Speaker Nancy Pelosi has repeatedly expressed that negotiations between Democrats and the administration on USMCA have been genuine and with the intention of moving the legislation forward. Ratifying the USMCA is contingent on support from Democrats, who possess a majority in the House of Representatives.

The Democrats are ostensibly concerned about the labor enforcement provision, specifically focusing on Mexico’s recent labor reforms that were passed in May. Enforcement of the new labor laws as well as the labor provisions in USMCA requires the renegotiation of countless employment contracts across Mexico. Additionally, Mexico’s labor unions must properly organize themselves to abide by the new labor provisions.

Democrats are also concerned about the deal’s environmental provisions. Republicans have repeatedly stated that the trade agreement should be an easy bipartisan win, as Senate Majority Leader Mitch McConnell and Rep. Kevin McCarthy argue in their Wall Street Journal opinion article, citing job creation and wage growth estimates.

The alleged benefits of USMCA are not quite as simple as they appear. While a report from the U.S. International Trade Commission (USITC) concluded that USMCA would increase U.S. gross domestic product (GDP) by 0.35% and employment by 0.12%, the report also predicted that the tariffs, due to changes to the rules of origin, would detrimentally affect American consumers for each job created. The USITC also predicted that automobiles would become more expensive under USMCA and that variety would decrease, causing Americans to purchase fewer of them.

The USITC’s report suggests that the agreement essentially props up manufacturing and mining at the expense of other sectors of the economy. According to The Economist, this should have ordinarily led the USITC to conclude that USMCA would have a net negative impact, however, the USITC factored in business confidence in a stable trade policy that was significant enough to swing the overall conclusion as positive. As the USITC explains within the report, “of the eight USMCA components included in the economy-wide model, provisions that reduce policy uncertainty…have the most significant impact on the estimated results.”

However, the outcome of ratification will likely be decided by political factors, not economic ones. Passing the USMCA is of importance to the administration since its China and E.U. trade policy has yet to yield any concessions amidst an ever escalating trade war with both sets of trading partners.

Supporters of the trade agreement want to see a vote on USMCA before the end of 2019, as the chances of ratification are likely to dwindle as the election gets closer. There is a limited amount of time left in the current legislative session, however, and the agenda is currently preoccupied with sanctions on Turkey and the recently initiated impeachment inquiry. Republican opposition to the impeachment inquiry is likely to further reduce the chances of progress being made on the ratification of the USMCA.

Speaker Pelosi could request for lawmakers in the House to vote on USMCA during an off-week, but there is a strong possibility for the USMCA ratification process to get pushed to the 2020 session. If that happens, there is a decent chance that legislators could continue to stall the trade agreement.

To date, Mexico is the only nation of the three signatories to have ratified the USMCA. Though the bill was introduced in Canada’s parliament last May, Canada had opted to move its ratification process in tandem with the U.S. Despite the recent elections in Canada, ratification of USMCA should still be on track. Justin Trudeau remains Prime Minister and the Liberal Party has retained enough seats to maintain a minority government.

We will continue to monitor this situation and will provide future updates as developments occur. Please contact Husch Blackwell’s International Trade and Supply Chain team for more information.

 

 

 

The authors previously reported that on or about February 27, 2019, the Ministry of Transport (“MOT”), PRC dropped formal application approval procedures and insurance (in the U.S., the China bond) requirements for all NVOCCs, including U.S. NVOCCs. While the MOT dropped the tedious application requirements and insurance (and bond) requirements for NVOCC registration, it still maintained a mandatory, much simplified, registration procedure. One misconception lingers in the U.S., which could become a major problem if not dealt with promptly.  U.S. NVOCCs which previously were approved under the old system are no longer registered, and must re-register under the new registration system. This has been verified by the authors, not only from reviewing the new regulations, but also by checking the list of registered NVOCCs on MOT’s website. NVOCCS that we have been assisting to get China NVOCC certificates, which were previously approved, and had active U.S. China bond riders, were no longer listed on the MOT web-site.

The other fallacy maintained by U.S. NVOCCs is that the China bond rider filed with the FMC has some magical quality. It does not. There is no reason to continue renewing that bond. First, it is not required by MOT regulations, and, secondly, the bond requirement is not a Federal Maritime Commission (“FMC”) requirement. The FMC, in accepting the filing of the so-called China bond rider, was merely an accommodation obtained by the FMC as a result of agreements between the FMC and the MOT. This allowed U.S. NVOCCs to increase their FMC bond by a China rider amount to raise the U.S. bond to the MOT requisite levels. This accommodation was entered into so that U.S. NVOCCs would not need to maintain cash deposits or insurance in China for this purpose. Since the cash deposits and insurance are no longer required by MOT, these U.S. China bond riders are also no longer required.

We are aware that several of the surety companies which provide the China bond riders have been formally requesting the FMC to provide guidance that these bonds are no longer required. There has been a deafening silence in that regard in that the FMC has provided no commentary at all on this topic. The authors, as attorneys in this industry, and by reviewing the pertinent MOT regulations, have determined that the China bond, cash deposits, and insurance are no longer requirements for NVOCCs participating in the China trade lanes. The U.S. China bond rider has no purpose at all in the FMC regulatory scheme. Our sense (not based on any factual knowledge other than reasonable speculation) is that the FMC is not getting much input from appropriate Department of State China desks to officially reach these same conclusions. Therefore, there is an official U.S. government silence on the topic.

The authors, who have been involved with MOT registration matters since their inception, make the following two suggestions:

  1. a) If you are a U.S. NVOCC and were registered with the MOT pursuant to the old system of registration, immediately take steps to re-register, if you have not already done so; and
  2. b) There is no current need to obtain or renew a China bond rider to file with the FMC to meet MOT requirements or for any other reason.

Lastly, if your company is going to re-register or register initially with MOT, we suggest that your China agent consult the following web site: http://wtis.mot.gov.cn/syportalapply/login.

If needed, Zheng Xie, a co-author of this article can assist with that process by assisting your Chinese agent as she has been doing since the new system went into effect. For more information, please contact Carlos Rodriguez.

 

On October 24, 2019, the Office of the United States Trade Representative (“USTR”) granted exclusions for 83 specific HTS numbers which are currently subject to 25 percent Section 301 tariffs under List 3. The product exclusions apply retroactively effective September 24, 2018 until August 7, 2020. To see a full list of the excluded products, click here.  The announcement relating to the List 3 exclusions comes surprisingly soon after the closure of the exclusion deadline for List 3 on September 30, 2019.  Typically, the exclusion processes have been taking 6 months or more for List 1 and List 2.

Starting September 24, 2018, the U.S. imposed additional 10 percent duties on goods from China with an annual trade value of approximately $200 billion as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.  These duties were increased to 25 percent on May 10, 2019.  Any goods on List 3 which are not specifically excluded are still subject to these additional 25% tariffs, until further notice.

This new set of product exclusions comes just days after the USTR issued a statement on the starting date for the Section 301 List 4 Exclusion process, scheduled to open on October 31, 2019 and ending on January 31, 2020.

For more information concerning these new product exclusions and how they may affect your business, please contact Husch Blackwell’s International Trade and Supply Chain team.

On October 23, 2019, Petitioners Bonney Forge Corporation and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (“USW”) filed a petition for the imposition of antidumping and countervailing duties on imports of Forged Steel Fittings from India and the imposition of antidumping duties on imports from the Republic of Korea.

SCOPE OF THE INVESTIGATION

The merchandise covered by these investigations is carbon and alloy forged steel fittings, whether unfinished (commonly known as blanks or rough forgings) or finished. Such fittings are made in a variety of shapes including, but not limited to, elbows, tees, crosses, laterals, couplings, reducers, caps, plugs, bushings, unions, and outlets. Forged steel fittings are covered regardless of end finish, whether threaded, socket-weld or other end connections. The scope includes integrally reinforced forged branch outlet fittings, regardless of whether they have one or more ends that is a socket welding, threaded, butt welding end, or other end connections.

While these fittings are generally manufactured to specifications ASME B16.11, MSS SP-79, MSS SP-83, MSS SP-97, ASTM A105, ASTM A350 and ASTM A182, the scope is not limited to fittings made to these specifications.

The term forged is an industry term used to describe a class of products included in applicable standards, and it does not reference an exclusive manufacturing process. Forged steel fittings are not manufactured from castings. Pursuant to the applicable standards, fittings may also be machined from bar stock or machined from seamless pipe and tube.

All types of forged steel fittings are included in the scope regardless of nominal pipe size (which may or may not be expressed in inches of nominal pipe size), pressure class rating (expressed in pounds of pressure, e.g., 2,000 or 2M; 3,000 or 3M; 6,000 or 6M; 9,000 or 9M), wall thickness, and whether or not heat treated.

Excluded from this scope are all fittings entirely made of stainless steel. Also excluded are flanges, nipples, and all fittings that have a maximum pressure rating of 300 pounds per square inch/PSI or less.

Also excluded from the scope are fittings certified or made to the following standards, so long as the fittings are not also manufactured to the specifications of ASME B16.11, MSS SP-79, MSS SP-83, MSS SP-97, ASTM A105, ASTM A350 and ASTM A182:

  • American Petroleum Institute (API) 5CT, API 5L, or API 11B;
  • American Society of Mechanical Engineers (ASME) B16.9;
  • Manufacturers Standardization Society (MSS) SP-75;
  • Society of Automotive Engineering (SAE) J476, SAE J514, SAE J516, SAE J517, SAE J518, SAE J1026, SAE J1231, SAE J1453, SAE J1926, J2044 or SAE AS 35411;
  • Underwriter’s Laboratories (UL) certified electrical conduit fittings;
  • ASTM A153, A536, A576, or A865;
  • Casing Conductor Connectors 16-42 inches in diameter made to proprietary specifications
  • Military Specification (MIL) MIL-C-4109F and MIL-F-3541; and
  • International Organization for Standardization (ISO) ISO6150-B.

To be excluded from the scope, products must have the appropriate standard or pressure markings and/or be accompanied by documentation showing product compliance to the applicable standard or pressure, e.g., “API 5CT” mark and/or a mill certification report.

Subject carbon and alloy forged steel fittings are normally entered under HTSUS 7307.92.3010, 7307.92.3030, 7307.92.9000, 7307.93.3010, 7307.93.3040, 7307.93.6000, 7307.93.9010, 7307.93.9040, 7307.93.9060, 7307.99.1000, 7307.99.3000, 7307.99.5045, and 7307.99.5060. They also may be entered under HTSUS 7326.19.0010.

The HTSUS subheadings and specifications are provided for convenience and customs purposes; the written description of the scope is dispositive.

PETITIONER

Bonney Forge Corporation

14496 Croghan Pike

Mount Union, PA 17066

Tel.: 814-542-2545

Heather McClure, VP, Corporate Controller & Assistant Treasurer

Email: hmcclure@bonneyforge.com

 

United Steelworkers

60 Blvd. of the Allies

Pittsburgh, PA 15222

Tel: 412-562-2400

Contact: Roy Houseman, Legislative Director

Email: rhouseman@usw.org

 

COUNSEL FOR PETITIONERS

Roger B. Shagrin

SCHAGRIN ASSOCIATES

900 Seventh Street, N.W.

Suite 500

Washington, DC 20001

NAMED PRODUCERS/EXPORTERS

For a list of foreign producers/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 October 23, 2019
DOC Initiation November 12, 2019
ITC Preliminary Investigation:
Questionnaires Due November 6, 2019
Request to appear at hearing November 11, 2019
Hearing November 13, 2019
Briefs November 18, 2019
ITC Vote December 9, 2019
DOC Preliminary Antidumping Determination March 31, 2020
DOC Preliminary CVD Determination January 16, 2019
DOC Final Antidumping Determination June 16, 2020
DOC Final CVD Determination March 31, 2020
ITC Final Determination July 31, 2020

 

ALLEGED DUMPING MARGIN

India:

Alleged Dumping Margin: 114.47%

Republic of Korea:

Alleged Dumping Margin: 45.03% – 198.67%

ALLEGED SUBSIDIES

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

 

IMPORTS OF SUBJECT MERCHANDISE

 

2016 2017 2018 2018 1H 2019 1H
India
Quantity (Short Tons) 17,000 26,205 30,204 15,558 19,478
Value ($) 48,425,121 74,346,718 97,091,587 49,236,079 59,559,140
AUV ($/Short Tons) 2,848 2,837 3,215 3,165 3,058
Republic of Korea
Quantity (Short Tons) 5,133 9,905 14,577 6,952 9,412
Value ($) 17,311,481 37,025,355 70,056,643 31,335,880 41,974,168
AUV ($/Short Tons) 3,373 3,738 4,806 4,507 4,460

 

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”) announced that starting on October 31, 2019, the exclusion process for Chinese imports subject to List 4 Section 301 tariffs of 15% will open and will conclude on January 31, 2020.

Details on the specifics of the application process are to be published in the Federal Register during the week of October 21, 2019, however, it is expected that the exclusion request process will be similar to the one instituted for List 3 and are to be submitted via USTR’s portal at exclusions.ustr.gov.  To be eligible for an exclusion, an importer must demonstrate that (a) there is an insufficient supply from U.S. sources; (b) the additional duties have caused severe economic harm; and (c) the imported good is not identified on the “Made in China 2025” list.  Exclusion requests are specific to products imported at the HTSUS 10-digit level and any request must clearly and succinctly identify the physical characteristics such that U.S. Customs can administer the exclusion.

USTR originally announced on August 6, 2019, that it would institute additional tariffs of 10% on approximately $250 billion dollars of imports from China identified on List 4A , but on August 26, 2019, it announced that the tariff rate would increase to 15% due to ongoing tensions and forestalled trade negotiations.  Tariffs were originally delayed on certain goods and the additional 15% tariff goes into effect on December 15, 2019, for imports on List 4B. Importers should review both List 4A and 4B to identify and ensure that goods that it is importing are properly monitored.  For any importer interested in submitting an exclusion request, please contact Husch Blackwell’s International Trade and Supply Chain Team.

We will continue to monitor this situation and will provide future updates as developments occur. Please contact Husch Blackwell’s International Trade and Supply Chain team for more information.