June 2018

On June 27, 2018, the U.S. Department of  Treasury’s Office of Foreign Assets Control (“OFAC”) officially revoked General Licenses H and I.  General License H previously allowed foreign owned or controlled subsidiaries of U.S. companies to engage in limited transactions with Iran that would have otherwise been prohibited under the Iranian Transactions and Sanctions Regulations (the “ITSR”).  General License I previously allowed U.S. persons to negotiate and enter into contingent contracts for exports and reexports to Iran of commercial passenger aircraft and related parts and services that were eligible to potentially receive specific licenses under the Iran Nuclear Deal, otherwise known as the Joint Comprehensive Plan of Action (the “JCPOA”).  OFAC previously advised that these revocations would be forthcoming in May, when President Trump formally announced his decision to withdraw from the JCPOA.

On June 19, 2018, the Coalition for Fair Rack Imports filed a petition for the imposition of antidumping and countervailing duties on imports of Steel Racks from the People’s Republic of China.

SCOPE OF THE INVESTIGATION

The merchandise covered by this investigation is steel racks and parts thereof, assembled or unassembled. Steel racks are racks made of steel of dimensions and configurations that can be adjusted as required, with or without locking tabs or slots, and with or without bolted, clamped, or welded connections, including any of the following: uprights, posts, columns, braces, frames, beams, arms, locking devices, and rails.

On Monday evening June 18, the U.S. Senate adopted draft legislation in its version of the National Defense Authorization Act for Fiscal Year 2019 (the “2019 Defense Bill”) which would: (i) prevent the U.S. Department of Commerce – Bureau of Industry and Security (“BIS”) from fulfilling its agreement to suspend current export controls applicable to Zhongxing Telecommunications Equipment Corporation of Shenzen, China and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (collectively “ZTE”), and (ii) expand existing language in the 2019 Defense Bill to prohibit all U.S. government agencies from contracting with ZTE.  The Senate approved this bill by a vote of 85-10.  After last night’s vote, it has been reported that ZTE shares have dropped more than 25%.  The U.S. House and Senate will still need to reconcile the differences in their versions of the 2019 Defense Bill before they send it to the President, but if they can do so while retaining enough votes to override a Presidential veto then BIS will be unable to remove ZTE from the Denied Persons list and ZTE will continue to be subject to export and re-export prohibitions in transactions involving U.S. origin goods, software and technology.

On Friday, June 15, 2018, President Trump announced that the US would be imposing a 25% tariff on Chinese technology imports. The tariffs were originally proposed on March 22, 2018 as a result of a Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. See our original post here.

Tariffs will be imposed on certain products starting on July 6, 2018.  Those products are listed here and consist of a subset of the products proposed on March 22. 

As a result of the Steel and Aluminum tariffs announced by President Trump in March 2018, and amended with proclamations issued on May 1, 2018, and June 1, 2018, several trading partners have decided that reciprocal and retaliatory tariffs on U.S. products are appropriate.  To date, the following countries have decided to retaliate – Canada, China, the European Union, India, and Mexico. See the comprehensive list of retaliatory tariffs here.

Nowadays, the only thing that remains certain in the industry of domestic and global trade is the unpredictability of influential decisions made by the U.S. government and how those decisions will impact trading laws and regulations.

There has been much to say regarding Section 232 and related tariff concerns. On Husch Blackwell’s TMT Industry Insider…

On June 7, 2018, Commerce Secretary Wilbur Ross announced that Chinese Telecommunications companies, Zhongxing Telecommunications Equipment Corporation of Shenzen, China and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (collectively “ZTE”) have agreed to pay $1 billion and place an additional $400 million in suspended penalty money in escrow in order to be removed from the Denied Persons List.  This penalty payment is in addition to the over $850 million in penalties that ZTE already previously paid to multiple U.S. government agencies in March of 2017 when it first entered into a settlement agreement arising out of its illegal re-exportation of controlled U.S. origin telecommunications equipment to Iran and other prohibited destinations.