On September 20, 2018, President Trump released a 16-page Executive Order which delegated various Presidential powers established under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) to both the U.S. Secretary of Treasury and the U.S. Secretary of State. As a result of this delegation, the U.S. Treasury Department‘s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department are now empowered to take actions which include (but are not limited to) designating parties to be sanctioned under various CAATSA provisions, selecting the specific menu-based sanctions to be imposed upon those parties and implementing those menu-based sanctions (we previously covered the CAATSA statute here, here and here). OFAC also updated its website to provide an additional FAQ response explaining the new Executive Order and indicating that it anticipates promulgating regulations to implement these sanctions.
United States Announces Re-imposition of First Round of Nuclear Sanctions on Iran
President Trump signed a new Executive Order on August 6, 2018, titled “Reimposing Certain Sanctions with Respect to Iran”. The Executive Order was timed to coincide with the last day of the 90-day wind-down period established for activities associated with certain sanctions relief authorized by the Joint Comprehensive Plan of Action (“JCPOA”). As a result, the first round of sanctions against Iran will become effective at 12:01 a.m. on August 7, 2018.
OFAC Officially Revokes Iran General Licenses and Signals Aggressive Enforcement Posture
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.
Senate Votes to Block Lifting of US Sanctions against ZTE
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.
Commerce Strikes Deal with Chinese Telecom Company ZTE with Largest Fine and Strictest BIS Compliance Measures to Date
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.
President Trump Announces Decision to Withdraw from Iran Nuclear Deal and Reimposition of Previously Waived Sanctions
President Trump announced today, May 8, 2018, that the United States will withdraw from the Iran Nuclear Deal and will begin reimposing previously waived sanctions on Iran. The deal, formally known as the Joint Comprehensive Plan of Action, or JCPOA, was signed by the U.S. in July 2015 along with China, France, Germany, Russia, the United Kingdom, the European Union and Iran. The White House issued a statement which explained that “President Trump is terminating United States participation in the JCPOA, as it failed to protect America’s national security interests.”
President Continues 232 Exemptions for Certain Countries, Announces Quota on Imports of Steel from South Korea
On April 30, 2018, the President issued two new Proclamations regarding the 232 tariffs imposed on imports of steel and aluminum articles into the United States. The new Proclamations modify the previous steel and aluminum Proclamations with respect to imports from Canada, Mexico, the European Union, Argentina, Australia, Brazil and South Korea.
U.S. Commerce Department Rescinds Export Privileges for China’s ZTE
On April 15, 2018, the Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a denial order against ZTE Corporation and ZTE Kangxun Telecommunications Ltd. (collectively “ZTE”), effectively banning U.S. companies from providing components to ZTE because the company had failed to comply with the terms of a disciplinary agreement reached in March 2017 arising from violations of U.S. export control restrictions against Iran and North Korea. It is estimated that U.S. companies provide nearly 25-30 percent of the components used in ZTE products. ZTE’s U.S. subsidiary advertises that it has been ranked by independent industry analysts as the fourth-largest supplier of mobile devices in the U.S. overall and second-largest supplier of prepaid devices.
Congress Renews Generalized System of Preferences (GSP) with Retroactive Effect
On March 23, 2018, the President signed into law the “Consolidated Appropriations Act, 2018” which, in addition to authorizing certain full-year federal appropriations, also included the renewal for the Generalized System of Preferences through December 31, 2020. The Generalized System of Preferences (commonly referred to as GSP) allows duty-free entry for over 5,000 goods from a wide range of designated beneficiary countries. The program was authorized by the Trade Act of 1974 to promote economic growth in developing countries and was implemented on January 1, 1976.
Petition Summary: Laminated Woven Sacks From the Socialist Republic of Vietnam, filed March 2018
Scope of the Investigation
The merchandise covered by this investigation is Laminated woven sacks or bags consisting of one or more plies of fabric consisting of woven polypropylene strip and/or woven polyethylene strip, regardless of the width of the strip; with or without an extrusion coating of polypropylene and/or polyethylene on one or both sides of the fabric; laminated by any method either to an exterior ply of plastic film such as biaxiallyoriented polypropylene (“BOPP”) or to an exterior ply of paper that is suitable for high-quality print graphics (i.e., it has an ISO brightness of 82 or higher and a Sheffield Smoothness of 250 or less); printed; displaying, containing, or comprising three or more colors, regardless of the type of printing process used; with or without lining; whether finished or unfinished; whether or not closed on one end; whether or not in roll form (including, but not limited to, sheets, lay-flat tubing, and sleeves); with or without handles; with or without special closing features; not exceeding one kilogram in weight. Laminated woven sacks subject to the scope are typically used for retail packaging of consumer goods such as pet foods and bird seed. Laminated woven sacks produced in Vietnam are subject to the scope regardless of the country of origin of the fabric used to make the sack.