The World Trade Organization (WTO) dispute settlement body ruled that the tariffs imposed by the U.S. on imports from China are inconsistent with the General Agreement on Tariffs and Trade (GATT), and recommended that the U.S. “bring its measures into conformity” with its obligations under the GATT.  Beginning in 2018, at the direction of President Trump, the U.S. imposed tariffs on $400 billion worth of imports from China over 4 different lists or tranches.  The U.S. and China negotiated a “phase one” trade deal earlier this year, however, most of the tariffs were still left in place.

The WTO panel concluded that the U.S. failed to demonstrate that the tariff measures are justified under Article XX(a) of the GATT 1994.  As a result, the panel found the U.S. tariff measures to be inconsistent with Articles I:1, II:1(a) and II:1(b) of GATT 1994.  In other words, the WTO found that the U.S. tariffs on China were discriminatory and excessive, and the U.S. failed to present justification for an exemption that could have legally allowed for the tariffs. Continue Reading WTO Rules that U.S. Section 301 Tariffs on Chinese Imports Violate International Trade Rules

The U.S. Department of Commerce’s (Commerce) Steel Import Monitoring and Analysis System (SIMA) will be modified effective October 13, 2020 to require that the country where the steel was “melted and poured” to be identified in the license application.  Other changes in the final rule published on September 11, 2020, include adding coverage for eight additional HTS numbers in order to synchronize the system with the coverage of Section 232 for basic steel mill products; increasing the low value license to $5,000 and allowing multiple uses; and extending the SIMA program indefinitely.

The new rule defines “melted and poured” as “the original location where the raw steel is: (A) First produced in a steel-making furnace in a liquid state; and then (B) Poured into its first solid shape…The first solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished steel mill product.”  The reporting requirement does not apply to raw materials used in steel manufacturing.  The new required information on the country of “melt and pour” may also be useful in investigating circumvention of duties.

The SIMA website will shut down from October 9 until October 13, 2020 when the new website is updated and goes live.  Commerce has created a page with the latest updates regarding SIMA.  In the interim, Commerce stressed that there will be limited availability for manual license processing.

Husch Blackwell encourages clients with questions or concerns to contact our International Trade and Supply Chain team.

A federal judge for the U.S. District Court for the District of Columbia dismissed FedEx Corporation’s challenge to the U.S. Department of Commerce’s (Commerce) Export Administration Regulations (EAR). Specifically, FedEx challenged the EAR requirements for global couriers to either verify the contents of its packages or to cease business with certain foreign entities, such as Huawei Technologies Co. Ltd., which FedEx described as departmental overreach that infringed upon its Fifth Amendment right to due process.

U.S. District Judge John D. Bates disagreed with FedEx’s assessment of the EAR’s impact on liberty, declaring that “unlike potentially one-off consumers, common carriers are repeat players with the institutional knowledge and scale to navigate the EAR, thus it is reasonable that common carriers might be held to a higher standard.”  According to Judge Bates, Commerce adequately demonstrated that the EAR is “rationally related to a legitimate government interest,” which satisfied the Fifth Amendment due process clause.  Judge Bates recognized the merit of the fundamental question raised in the complaint—whether the EAR is stricter than necessary to protect national security—but concluded that the court did not need to decide that issue “because FedEx  abandons its initial framing of the ultra vires claim in its opposition brief…”  Judge Bates’ ruling further solidifies the expectation that large global companies which are more experienced in international trade regulations may be held to a higher standard of compliance under the EAR.

We encourage clients and companies with questions or concerns regarding the EAR to contact Cortney Morgan or Grant Leach of Husch Blackwell’s Export Controls & Economic Sanctions team.

On September 10, 2020, HMTX Industries LLC, along with Halstead New England Corporation, and Metroflor Corporation (importers of vinyl tile) filed a complaint (Ct. No. 20-00177) at the Court of International Trade (CIT) challenging both the substantive and procedural processes followed by the United States Trade Representative (USTR) when instituting Section 301 Tariffs on imports from China under List 3. The List 3 tariffs went into effect on September 24, 2018. This is the first challenge of its kind filed against the administration’s use of Section 301 Tariffs in the ongoing trade war between the United States and China.

The complaint alleges that USTR’s institution of List 3 tariffs violated the Trade Act of 1974 on the grounds that USTR failed to make a determination or finding that there was an unfair trade practice that required a remedy and moreover, that List 3 tariffs were instituted beyond the 12 month time limit provided for in the governing statute (19 U.S.C. § 2414). The complaint also argues that the manner in which in the List 3 tariff action was implemented violated the Administrative Procedures Act (APA). According to the complainants, USTR failed to provide adequate opportunity for comments, failed to consider relevant factors when making its decision (e.g. no analysis of increased burden on U.S. commerce from unfair trade practices), and failed to connect the record facts to the choices it made by not explaining how the comments received by USTR came to shape the final implementation of List 3.

Husch Blackwell continues to monitor this challenge against the Section 301 List 3 tariffs on Chinese imports and will provide future updates as more information becomes available. We encourage companies who are currently affected by Section 301 Tariffs under List 3 to contact Husch Blackwell’s International Trade and Supply Chain group for further information.

U.S. Customs and Border Protection (“CBP”) is preparing a regulatory change that would eliminate the $800 de minimis exemption for imports subject to Section 301 tariffs, according to a proposed rule submitted by CBP to the Office of Management and Budget (“OMB”) on September 2, 2020.  Reviews of the proposed rule by OMB and an interagency review are the final steps before the publication of a final rule in the Federal Register. Continue Reading CBP Proposes Rule to Eliminate Section 321 Exemption for Imports Subject to Section 301 Tariffs

The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently published an Advanced Notice of Proposed Rulemaking (“ANPRM”) regarding the identification and review of controls for certain “foundational technologies.”  This ANPRM represents another step toward implementation of the “emerging and foundational technology” provisions set forth in the Export Control Reform Act (“ECRA”) of 2018, which has been slow to get off the ground.  Section 1758 of the ECRA requires that “foundational technologies” be identified and that BIS establish appropriate controls for that technology under the Export Administration Regulations (“EAR”).

The ANPRM solicits public comments concerning the definition of and criteria for identifying “foundational technologies” in order to apply controls to “emerging technologies” and “foundational technologies” which are essential to U.S. national security, pursuant to the ECRA.  Specifically, BIS is asking interested parties to submit comments by October 26, 2020 responding to the following topics:

(1) How to further define foundational technology to assist in identification of such items;

(2) sources to identify such items;

(3) criteria to determine whether controlled items identified in AT level Export Control Classification Numbers (ECCNs), in whole or in part, or covered by EAR99 categories, for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security;

(4) the status of development of foundational technologies in the United States and other countries;

(5) the impact specific foundational technology controls may have on the development of such technologies in the U.S.;

(6) examples of implementing controls based on end-use and/or end-user rather than, or in addition to, technology based controls;

(7) any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and

(8) any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of a foundational technology that would warrant consideration for export control.

BIS explained that it does not seek to expand jurisdiction over technologies that are not already subject to the EAR.  BIS, through an interagency process, seeks to determine whether there are specific foundational technologies which warrant more restrictive controls.  Interested parties may submit comments through the federal rulemaking portal (regulations.gov) or via mail to BIS.

Husch Blackwell encourages clients and companies to review the recent ANPRM for applicability.  If you are interested in submitting comments, please contact Cortney Morgan or Grant Leach of our Export Controls & Economic Sanctions team.

On September 1, 2020 the Office of the United States Trade Representative (USTR), Department of Agriculture, and Department of Commerce issued a 32-page report outlining the Trump Administration’s plan to address increased foreign imports of perishable fruits and vegetables.  Following the public hearings held in August, the Administration published this report in hopes to open a dialogue with senior Mexican Government officials over the next 90 days regarding specific produce. Continue Reading USTR, DOC, and Department of Agriculture Issue Plan to Investigate Foreign Imports of Certain Perishable Produce

U.S. Supply ChainOn September 3, 2020, the U.S. Department of Commerce published a notice initiating new Administrative Reviews for antidumping duty (AD) and countervailing duty (CVD) orders with mostly July anniversary dates, but some other dates as well. Listed below are the countries and products named in the notice:

  1. Belgium: Citric Acid and Certain Citrate Salts (A-423-813)
  2. Colombia: Citric Acid and Certain Citrate Salts (A-301-803)
  3. India:
  • Fine Denier Polyester Staple Fiber (A-533-875)
  • Polyethylene Terephthalate (PET) Film (A-533-824/C-533-825)
  1. Italy: Certain Pasta (A-475-818/C-475-819)
  2. Japan: Cold-Rolled Steel Flat Products (A-588-873)
  3. Malaysia: Certain Steel Nails (A-557-816)
  4. Oman: Certain Steel Nails (A-523-808)
  5. Korea:
  • Certain Steel Nails (A-580-874)
  • Corrosion-Resistant Steel Products (A-580-878/C-580-879)
  1. Vietnam: Certain Steel Nails (A-552-818/C-552-819)
  2. Taiwan
  • Certain Steel Nails (A-583-854)
  • Corrosion-Resistant Steel Products (A-583-856)
  • Polyethylene Terephthalate (PET) Film (A-583-837)
  1. Thailand: Citric Acid and Certain Citrate Salts (A-549-833)
  2. People’s Republic of China:
  • Tapered Roller Bearing and Parts Thereof, Finished or Unfinished (A–570–601)
  • Quartz Surface Products (A–570–084/C-570-085)
  • Xanthan Gum (A-570-985)
  1. Turkey:
  • Steel Concrete Reinforcing Bar (A-489-829/C-489-830)
  • Certain Pasta (C-489-806)
  1. Ukraine: Oil Country Tubular Goods (A-823-815)

Husch Blackwell’s International Trade and Supply Chain team has extensive experience in these types of proceedings and encourages those who believe they may be affected to contact us.

In Husch Blackwell’s August 2020 Trade Law Newsletter, you’ll learn about the following updates in international trade and supply chain law:

  • Commerce proposed modifications to AD/CVD laws to strengthen enforcement
  • EU lifted tariffs on U.S. lobsters; U.S. agreed to limited tariff rollback on certain products
  • USTR revised list of EU imports subject to Section 301 tariffs
  • 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
  • August export controls and sanctions

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

On September 1, 2020, 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.  In addition to administrative reviews, Commerce has included an opportunity to request a new suspension agreement proceeding pertaining to fresh tomatoes from Mexico. Continue Reading Opportunity to Request Administrative Review