The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has announced that its 33rd Annual Conference on Export Controls will take place in Washington, D.C. from June 29 to July 1, 2020. The conference attracts attendees from various sectors to learn about and discuss relevant export control issues. The Annual Conference will be held at the Marriott Marquis Hotel in downtown Washington near the Mount Vernon Square area. According to BIS, more detailed program information will be provided as it becomes available.
On February 14, 2020, the Office of the U.S. Trade Representative (USTR) announced that it had completed its review of the current Section 301 tariffs due to the ongoing Large Civil Aircraft dispute with the European Union (EU). As previously reported, various European goods (including aircraft, certain textiles and wearing apparel, hardware, cheeses, and other agricultural goods) were subject to additional duties due the ongoing Large Civil Aircraft dispute with the EU since October 18, 2019.
With this announcement, new airplanes and aircraft are now subject to additional duty of 15 percent (increased from 10 percent).
All other goods on the list will continue to be subject to an additional 25% duty (no increase). Notably, only one tariff subheading was removed from the initial list (HTSUS Subheading 2009.89.40 – prune juice, concentrated or not concentrated). One tariff subheading not on the initial list was added to the list (HTSUS Subheading 8214.90.60 – Butchers’ or kitchen chopping or mincing knives (o/than cleavers w/their handles)).
It is also important to note that while the United Kingdom is officially no longer a part of the EU, certain goods imported from the United Kingdom are still subject to this tariff action.
USTR indicates in the notice that the U.S. remains open to a negotiated settlement that addresses current and future subsidies to large civil aircraft provided by the EU and certain current and former Member States. However, going forward, USTR may revise the action “as appropriate immediately upon any EU imposition of additional duties on U.S. products in connection with the Large Civil Aircraft dispute or with the EU’s WTO challenge to the alleged subsidization of U.S. large civil aircraft.”
We will continue to monitor this situation and will provide future updates as additional details become available. If you have any questions regarding the Section 301 tariffs related to the Large Civil Aircraft Dispute, please contact Robert Stang, Emily Lyons or a member of Husch Blackwell’s International Trade and Supply Chain team.
- The processes followed by the administration in implementing additional Section 232 tariffs on steel and aluminum products not originally included in the Section 232 duties are procedurally flawed.
- The institution of additional duties on products not originally included in the Section 232 duties on steel and aluminum is potentially unconstitutional.
- One party has already appealed the issue to the Court of International Trade and obtained an injunction stopping Customs and Border Protection (“CBP”) from collecting duties on steel and aluminum derivative products.
- The injunction is company-specific and we believe an injunction obtained by this company or other companies will not apply to your company unless an appeal is filed and an injunction is obtained on your behalf.
- If your company’s imports fall into any one of the categories below, then you may contact Husch Blackwell to determine the best strategic approach to ensure that you do not face unnecessary duties.
On February 13, 2020, the Court of International Trade issued an injunction barring U.S. Customs and Border Protection from collecting new Section 232 tariffs on finished steel and aluminum products from a single importer, PrimeSource. The preliminary injunction states that CBP cannot collect “duty deposits” on PrimeSource’s entries of goods covered by these additional tariffs, which took effect on February 8, 2020. The injunction, however, sets specific bonding requirements while the merits of the appeal are being reviewed by the CIT and until a final judgment is issued in the case.
The CIT’s grant of the injunction stems from complaints filed on behalf of PrimeSource challenging the validity of the Trump Administration’s decision to expand the scope of the existing Section 232 tariffs to several different “derivative” products. By way of background, on January 27, 2020, the Trump Administration announced additional 25% tariffs on steel and 10% tariffs on aluminum derivative products.
The covered steel items and subheadings are:
- Nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material (excluding such articles with heads of copper), suitable for use in powder-actuated hand tools, threaded (described in subheading 7317.00.30)
- Nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material (excluding such articles with heads of copper), of one piece construction, whether or not made of round wire; the foregoing described in statistical reporting numbers 7317.00.5503, 7317.00.5505, 7317.00.5507, 7317.00.5560, 7317.00.5580 or 7317.00.6560 only and not in other statistical reporting numbers of subheadings 7317.00.55 and 7317.00.65
- Bumper stampings of steel, the foregoing comprising parts and accessories of the motor vehicles of headings 8701 to 8705 (described in subheading 8708.10.30)
- Body stampings of steel, for tractors suitable for agricultural use (described in subheading 8708.29.21)
The covered aluminum items and subheadings are:
- Stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.10.50);
- Stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.20);
- Stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing not comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.40);
- Stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.90.50);
- Bumper stampings of aluminum, the foregoing comprising parts and accessories of the motor 15 vehicles of headings 8701 to 8705 (described in subheading 8708.10.30); and
- Body stampings of aluminum, for tractors suitable for agricultural use (described in subheading 8708.29.21).
Applicability of the Section 232 Injunction
The challenge filed by PrimeSource Building Products is a company-specific appeal related to the authority of the President to impose tariffs under Section 232 past the statutorily proscribed deadlines and processes for the institution of these special tariffs. Given that these additional tariffs were imposed almost 2 years after the original Section 232 duties were announced, the fundamental basis of the challenge is the procedural inconsistencies in the processes followed by the Executive Branch as well as the unconstitutionality of imposing these duties without adequate notice. The Court of International Trade has instructed plaintiffs to specify the harm to each individual company in order for it to be able to review and potentially grant the requested relief.
We believe that Husch Blackwell’s clients would be interested in pursuing this course of action by filing a complaint and a temporary restraining order, similar to the ones filed by PrimeSource, should their imports fall under either the steel or aluminum derivative product descriptions and tariff classifications above. It is critical for clients to act quickly to ensure that they are not faced with significant additional duties on their imported steel and aluminum products.
Husch Blackwell continues to monitor the challenge against the Section 232 derivative product duties and will provide updates as more information becomes available. If your company is interested in pursuing this course of action or has any questions regarding the Section 232 duties, please contact our International Trade and Supply Chain team.
On February 13, 2020, the Department of Commerce (“Commerce”) announced the initiation of an antidumping duty (“AD”) investigation of imports of difluoromethane, a chemical compound known also as R-32, from the People’s Republic of China. The petitioner in this case is Arkema, Inc., which estimated that 2018 imports of R-32 from China were valued at approximately $21.5 million. See our previous post summarizing Arkema’s R-32 petition for details on the scope of the investigation and for importers and exporters named in the petition.
The U.S. International Trade Commission (“ITC”) is currently scheduled to make its preliminary determination on or before March 9, 2020. If the ITC determines that there is reasonable indication that imports of R-32 from China materially injure or threaten the U.S. domestic industry, the investigation will continue and Commerce will be scheduled to announce its preliminary determination on July 2, 2020. If the ITC’s determination is negative, that imports of R-32 from China do not pose a risk of injury to the domestic industry, the investigation will be terminated.
Husch Blackwell is monitoring the difluoromethane (R-32) antidumping duty investigation closely and will provide further updates as the investigation progresses. If you have any questions or concerns regarding the antidumping duty investigation into imports of R-32 from China, please contact our International Trade and Supply Chain team.
The United States has updated its list of developing and least-developed countries pertaining to countervailing duty (CVD) law. The most notable change is that India has been removed from this list due to its share of global trade, one of the several factors considered in creating the list of developing countries. Prior to the change in designation, if India faced a CVD investigation and the subsidy margin was below the de minimis threshold of 2%, the United States would be forced to conclude that there was no subsidization and the investigation would be terminated with respect to India. With the change in designation, this preferential margin threshold is no longer available to India in CVD investigations initiated by the United States. Going forward, the United States would terminate a CVD investigation against India only if the new de minimis threshold, a subsidy margin below 1%, is satisfied. Other developing countries ineligible for the 2% de minimis standard due to their share of global trade are Brazil, Indonesia, Malaysia, Thailand, and Vietnam.
If you have any questions or concerns regarding India’s change in designation or another country’s status under the new list of developing countries, please contact Husch Blackwell’s International Trade and Supply Chain team.
On February 10, 2020, the Department of Commerce (“Commerce”) announced its affirmative final determinations in the AD and CVD investigations of imports of carbon and alloy steel threaded rod from China and India. See the fact sheet for a summary of the final cash deposit rates and margins.
In the China AD investigation, Commerce calculated cash deposit rates of 4.26% and 14.16% to the mandatory respondents Zhejiang Junyue Standard Part Co., Ltd. and Ningbo Zhongjiang High Strength Bolts Co., Ltd., respectively. Chinese companies that are eligible for a separate rate received a rate of 11.47%. The antidumping cash deposit rate for all other Chinese companies is 59.45%.
In the China CVD investigation, Commerce calculated and assigned subsidy rates of 66.81% and 31.02% to the mandatory respondents Zhejiang Junyue Standard Part Co., Ltd. and Ningbo Zhongjiang High Strength Bolts Co., Ltd., respectively. The subsidy rate for all other Chinese exporters is 41.17%.
In the India AD investigation, Commerce assigned a cash deposit rate of 28.34% to mandatory respondent Daksh Fasteners and 2.47% for mandatory respondent Mangal Steel Enterprises Limited. The cash deposit rate for all other Indian exporters is 2.47%.
In the India CVD investigation, Commerce assigned a cash deposit rate of 211.72% to mandatory respondent Daksh Fasteners and a rate of 6.07% to mandatory respondent Mangal Steel Enterprises Limited. The cash deposit rate for all other Indian exporters is 6.07%.
The ITC is currently scheduled to make its final determinations on or about March 23, 2020. If the ITC makes affirmative final determinations of material injury to domestic industry, then Commerce will issue AD and CVD orders instructing Customs and Border Protection (“CBP”) to collect deposits based on the applicable duty rate. If the ITC makes negative determinations of injury, then the investigations will be terminated.
Husch Blackwell is monitoring the outcome of the AD and CVD investigations closely and will provide an update on the ITC’s final determinations when available. If you have any questions or concerns regarding Commerce’s final determinations pertaining to imports of carbon and alloy steel threaded rod from China and India, please contact our International Trade and Supply Chain team.
China’s Ministry of Finance announced today that China will reduce tariffs by up to fifty percent on certain U.S. imports as the two countries move forward to implement “Phase One” of the trade deal signed on January 15, 2020. China’s tariff cuts will affect U.S. goods worth approximately $75 billion and will reduce duty rates from 10% to 5% and from 5% to 2.5% depending on the product. More than 1,700 products will be affected, such as soybeans, automobiles, oil and gas, seafood, and poultry.
The affected U.S.-origin products were originally part of China’s retaliatory tariffs which took effect on September 1, 2019, after the United States implemented the 15% Section 301 List 4A tariffs, which the U.S. has since pledged to reduce to 7.5%. The Finance Ministry indicated that the reasoning behind the decision to reduce tariffs was to “alleviate economic and trade frictions” and to “expand economic and trade cooperation” with the United States. The proposed tariff cuts are scheduled to take effect on February 14, 2020, to coincide with the implementation of Phase One of the trade agreement. For additional information on the signing of the U.S.-China Trade Agreement, see our earlier post here.
China’s decision to reduce tariffs has been interpreted by many analysts as a sign of commitment to Phase One of the trade deal with the United States, since it is anticipated that China will be unable to meet the ambitious purchasing targets for U.S. imports that were part of the signed agreement, especially with the current coronavirus epidemic that has significantly slowed China’s economy. To fulfill the purchasing obligations, U.S. exports to China would need to increase to over $260 billion in 2020 and over $300 billion in 2021. Such an increase is unprecedented in the history of trade.
Husch Blackwell is monitoring the U.S.-China trade discussions closely and will continue to provide updates as more information becomes available. If you have any questions regarding the phase one U.S.-China trade deal or other tariff related issues, please contact our International Trade and Supply Chain team.
On February 5, 2020, Petitioner Wincom Incorporated filed a petition for the imposition of antidumping and countervailing duties on imports of certain corrosion inhibitors 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 petition is tolyltriazole and benzotriazole. This includes tolyltriazole and benzotriazole of all grades and forms, including their sodium salt forms. Tolyltriazole is technically known as Tolyltriazole IUPAC 4,5 methyl benzotriazole. It can also be identified as 4, 5 methyl benzotriazole, tolutriazole, TTA, and TTZ. Benzotriazole is technically known as IUPAC 1,2,3-Benzotriazole. It can also be identified as 1,2,3-Benzotriazole, 1,2-Aminozophenylene, 1H-Benzotriazole, and BTA. All forms of tolyltriazole and benzotriazole, including but not limited to flakes, granules, pellets, prills, needles, powder, or liquids, are included within the scope of these petitions.
The scope includes tolyltriazole/sodium tolyltriazole and benzotriazole/sodium benzotriazole that are combined or mixed with other products. For such combined products, only the tolyltriazole/sodium tolyltriazole and benzotriazole/sodium benzotriazole component is covered by the scope of these investigations. Tolyltriazole and sodium tolyltriazole that have been combined with other products is included within the scope, regardless of whether the combining occurs in third countries. Tolyltriazole, sodium tolyltriazole, benzotriazole and sodium benzotriazole that is otherwise subject to these investigations is not excluded when commingled with tolyltriazole, sodium tolyltriazole, benzotriazole, or sodium benzotriazole from sourcesnot subject to these investigations. Only the subject merchandise component of such commingled products is covered by the scope of these investigations.
Tolyltriazole has the Chemical Abstracts Service (“CAS”) registry number 299385-43-1. Tolyltriazole is classified under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 29188.8.131.52. Sodium Tolyltriazole has the CAS registry number 64665-57-2 and is classified under HTSUS subheading 29184.108.40.206. Benzotriazole has the CAS registry number 95-14-7 and is classified under HTSUS subheading 29220.127.116.11. Sodium Benzotriazole has the CAS registry number 15217-42-2. Sodium Benzotriazole is classified under HTSUS subheading 2918.104.22.168. Although the HTSUS subheadings and CAS registry numbers are provided for convenience and customs purposes, the written description of the scope of these investigations is dispositive.
11444 Deerfield Road, Suite B
Blue Ash, Ohio 8522-2114
Contact Person: James Milawski, President
COUNSEL FOR PETITIONER
Stephen J. Orava
King & Spalding LLP
1700 Pennsylvania Avenue, NW
Washington, DC 20006
For a list of foreign products/exporters alleged by Petitioner, please see Attachment I.
For a list of importers alleged by Petitioner, please see Attachment II.
|Petition Filed||February 5, 2020|
|DOC Initiation||February 25, 2020|
|ITC Preliminary Investigation:|
|Questionnaires Due||February 19, 2020|
|Request to appear at hearing||February 24, 2020|
|Hearing||February 26, 2020|
|Briefs||March 2, 2020|
|ITC Vote||March 23, 2020|
|DOC Preliminary Antidumping Determination||July 14, 2020|
|DOC Preliminary Countervailing Determination||April 20, 2020|
|DOC Final Antidumping Determination||September 28, 2020|
|DOC Final Countervailing Determination||July 14, 2020|
|ITC Final Antidumping Determination||November 11, 2020|
|ITC Final Countervailing Determination||August 28, 2020|
ALLEGED DUMPING MARGIN
China: 388.28% to 420.32%
For a list of alleged countervailing duty programs, please see Attachment III.
IMPORTS OF SUBJECT MERCHANDISE
The petition does not make public the volume and value of imports of subject merchandise.
The Commerce Department issued its final rule amending the countervailing duty regulations to address potential currency undervaluation. This revision to Commerce’s regulations will take effect in 60 days and will apply to all new investigations and administrative reviews that begin on or after April 6, 2020. The new rules would effectively clear the way for the U.S. to start applying punitive tariffs on goods from countries accused of having undervalued currencies.
Under the revised regulations, Commerce in the conduct of its countervailing duty proceedings will now have the authority to take into consideration the real effective exchange rates to determine the extent to which a currency is undervalued. They will also be able to seek the Treasury Department’s formal, non-binding evaluation on whether the foreign government’s actions were responsible for the undervaluation. If Commerce determines that there is undervaluation of the currency and that the undervaluation resulted from government action, Commerce will then potentially consider currency exchanges by the exporters and/or traders to be a subsidy given that the exporter or trader would effectively receive more domestic currency in return for their exchanges of U.S. dollars than they otherwise would have been able to receive under the old rules. In the conduct of its countervailing duty investigations and reviews, Commerce will now look at each individual exporter’s currency exchanges, and specifically the amount of additional domestic currency received in exchanges due to undervaluation. It will then potentially add the currency subsidy amount to the exporter’s overall countervailing duty rate. The move would give new muscle to U.S. complaints about currency manipulation that have in the past targeted economies like China and Japan and thus turn the more than $6 trillion-a-day global currency market into a new battlefield in the Trump administration’s trade wars. The new rule was opposed by the Treasury Department when it was first proposed in May 2019 as it would allow U.S. companies to file trade complaints with the Commerce Department over specific imported products by treating undervalued currencies as a form of an unfair subsidy.
The new regulations have far reaching effects as it would allow the U.S. to impose countervailing duties on goods from countries accused of manipulating their currencies, even in cases where they were not officially found to be a currency manipulator by the U.S. Department of Treasury. Previous administrations have examined this issue but have delayed or resisted efforts to take such actions as it could potentially lead to currency wars amongst trading partners.
Commerce’s announcement today is the result of campaign promises from the 2016 election. “This Currency Rule is an important step in ensuring that unfair trade practices are properly remedied,” said Secretary of Commerce Wilbur Ross in a statement. “While successive administrations have balked at countervailing foreign currency subsidies, the Trump Administration is taking action to level the playing field for American businesses and workers.”
In a question and answer section attached to Monday’s announcement, the Commerce Department said it would preserve the final power to make any determination about whether a currency’s value presented an unfair subsidy for that country’s exporters. The statutes governing Treasury’s mandate to monitor currencies and Commerce’s power to impose anti-subsidy duties had different criteria, Commerce said.
“Hence, the two processes may result in different outcomes as to a particular country, theoretically including the possibility of applying countervailing duties to a country that does not meet the criteria for designation under the laws Treasury administers,” the statement said.
Commerce also said the new rule would allow it to specifically impose currency-related tariffs against China even if the Treasury did not label it a currency manipulator. The Treasury last month lifted a designation of China as a manipulator just days before Trump signed a “Phase One” trade deal with China that included language on currencies, though the new rule appears to give the U.S. powers to act that go beyond what was included in last month’s deal.
The Commerce Department put some purported caveats on its powers, saying it would “not normally include monetary and related credit policy of an independent central bank or monetary authority” in determining whether foreign governments had acted inappropriately to weaken currencies. “Commerce will seek and generally defer to Treasury’s expertise in currency matters,” it said. This statement, however, leaves a lot of room open for potential unilateral action by Commerce, as Commerce has reserved for itself the authority to find that undervaluation exists, even if Treasury in its bi-annual report makes a determination that a particular currency is artificially weak but not undervalued. This type of broad authority is similar to Commerce’s authority to conduct Particular Market Situation (“PMS”) investigations resulting in contested decisions and appeals to the Court of International Trade.
We continue to monitor the situation and will provide updates as more information becomes available. Should you have any questions regarding Commerce’s final rule, please contact Husch Blackwell’s International Trade and Supply Chain team.
On January 31, 2020, the United States Trade Representative (“USTR”) issued another round of product exclusions pertaining to the 25% Section 301 List 3 Tariffs. The new list of exclusions includes 52 specifically crafted product descriptions that cover 117 separate exclusion requests. To view the full list of excluded products, click here. According to the USTR, the product exclusions apply retroactively to entries going back to September 24, 2018 and remain in effect until August 7, 2020. The products affected include seafood, bicycles and bicycle tires, printed circuit boards, and faucets and valves of various metals.
We encourage clients and companies to review the listed exclusions and contact Husch Blackwell’s International Trade and Supply Chain Team with any questions or concerns.