The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) published a notice in the Federal Register announcing a rule change effective June 18, 2020, which amends the Export Administration Regulations (“EAR”) to allow for the release of certain technology to Huawei Technologies, Co., Ltd. and 114 of its non-U.S. affiliates designated on the Entity List without a license “if such release is made for the purpose of contributing to the revision or development of a ‘standard’ in a ‘standards organization.’”  Despite being added to the Entity List by BIS in 2019 (as previously reported on here), Huawei and its foreign affiliates still participate in several international standards organizations in which U.S. companies also participate.  BIS states in its notice “[a]s international standards serve as the building blocks for product development and help ensure functionality, interoperability, and safety of the products, it is important to U.S. technological leadership that U.S. companies be able to work in these bodies in order to ensure that U.S. standards proposals are fully considered.”

As a result of Huawei’s entity list designation, BIS has received questions regarding the applicability of the EAR in the context of standards setting or development.  On August 19, 2019, BIS issued a “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity is Involved”, which addressed the applicability of certain types of releases.  With the issuance of this new interim final rule, that previous guidance has been rescinded.  The new rule removes certain licensing requirements imposed by the original listing and removes the need to determine the application of controls to those releases.  The interim final rule revises ninety-three entries, which list Huawei and its 114 foreign affiliates by changing the text in the Licensing Requirement column from “For all items subject to the EAR (See §744.11 of the EAR)” to “For all items subject to the EAR (see § 744.11 of the EAR), EXCEPT for technology subject to the EAR that is designated as EAR99, or controlled on the Commerce Control List for anti-terrorism reasons only, when released to members of a ‘‘standards organization’’ (see § 772.1) for the purpose of contributing to the revision or development of a ‘‘standard’’ (see § 772.1).’’

According to the notice, the definition of a “standard” for the purpose of this rule can be found in the Office of Management and Budget (“OMB”) Circular A-119.  BIS welcomes comments from interested parties on the impact of the rule change on or before August 17, 2020.

If your company is interested in submitting comments, please contact Cortney Morgan or Grant Leach of Husch Blackwell’s Export Controls & Economic Sanctions team.

New U.S. sanctions on Syria took effect on June 17, 2020 as a result of the “Caesar Syria Civilian Protection Act of 2019” (“Caesar Act”) that was signed into law on December 20, 2019 as part of the National Defense Authorization Act for Fiscal Year 2020. The Caesar Act is named after a Syrian photographer who documented abuses in the Assad regime’s prisons.

Pursuant to the Caesar Act and Executive Order 13894, the U.S. State and Treasury Departments announced 39 new additions to the Specially Designated Nationals and Blocked Persons List (the “SDN List”) maintained by the Treasury Department’s Office of Foreign Assets Control (“OFAC”).  The Treasury and State Departments also promised that more SDN List designations will follow. The 39 designated entities include regime officials, members of the ruling Assad family, the Fourth Division of the Syrian Arab Army, and an Iran-sponsored militia.  The new designations also include 20 private companies.

While most of the designated entities are holding companies based in Syria, several are based outside of Syria in Lebanon, Canada, and Austria.  Although the U.S. has consistently imposed blocking sanctions to generally prohibit U.S. persons from transacting with Syria, the Caesar Act now imposes additional secondary sanctions which apply to foreign companies or individuals who “facilitate the Assad regime’s acquisition of goods, services, or technologies” that support regime military activities as well as Syria’s oil and gas industries. The Caesar Act also mandates sanctions on those profiting from reconstruction activities in government-controlled areas of Syria, according to the U.S. Department of State’s fact sheet on the matter.

We encourage clients and companies to familiarize themselves with the Caesar Act.  Non-U.S. companies should be aware of this expansion of the State and Treasury Departments’ authority to impose U.S. secondary sanctions in transactions involving Syria.  Please contact Cortney Morgan or Grant Leach of Husch Blackwell’s Export Controls & Economic Sanctions team with any questions or concerns.

The U.S. International Trade Commission, a quasi-judicial federal agency that administers U.S. trade remedy laws, has announced new leadership. President Trump designated Jason E. Kearns as Chairman and Randolph J. Stayin as Vice Chairman of the ITC, each for two-year terms effective June 17, 2020. Both Chairman Kearns and Vice Chairman Stayin served as ITC commissioners before these designations.

Chairman Kearns (a Democrat) joined the Commission in March 2018, for a term expiring in December 2024. Before his appointment to the ITC, Chairman Kearns served as Chief International Trade Counsel for the Democratic staff of the U.S. House of Representatives Committee on Ways and Means. Prior to that, he was Assistant General Counsel at the Office of the U.S. Trade Representative.

Vice Chairman Stayin (a Republican) joined the ITC in August 2019, for a term expiring in June 2026. Before joining the ITC, Vice Chairman Stayin had a long career in private legal practice, focusing on trade remedies and trade policy.

Some may be surprised that President Trump designated a Democrat as ITC chairman, but this is controlled by statute. Under 19 U.S.C. § 1330, the President must designate as ITC chairman a commissioner who (1) belongs to a different political party than that of the outgoing chairman, and (2) has at least one year of continuous service as an ITC commissioner by the date of the designation. Moreover, the statute requires that the vice chairman’s political party differ from the chairman’s. Chairman Kearns replaces outgoing chairman David S. Johanson (a Republican), who served as chairman through June 16, 2020, and will remain as a commissioner.

In addition to administering antidumping and countervailing duty investigations and Section 337 actions, the ITC provides the President and Congress with independent analysis and support on matters relating to tariffs and international trade.

Husch Blackwell encourages those who may have any questions or concerns regarding matters with the ITC to reach out to either our International Trade and Supply Chain team or Section 337 team.

U.S. Supply Chain

On June 8, 2020, the United States Trade Representative (“USTR”) issued new product exclusions pertaining to the 7.5% Section 301 List 4A tariffs.  The new list of exclusions includes two 10-digit HTS subheadings and 32 specially prepared product descriptions that together cover 55 separate exclusion requests.  The full list of excluded products is available here.  According to the USTR, the product exclusions apply retroactively to September 1, 2019 and remain in effect until September 1, 2020.  The exclusions cover various products, including certain types of gloves, watch components, and TV LCD main board assemblies.

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.

On June 8, 2020, the U.S. Department of Commerce published a notice initiating new Administrative Reviews for antidumping duty (AD) and countervailing duty (CVD) orders with April anniversary dates. Listed below are the countries and products named in the notice:

AD

  1. Argentina: Biodiesel (A-357-820)
  2. Indonesia: Biodiesel (A-560-830)
  3. The People’s Republic of China
    • Tetrafluoroethane (R-134a) (A-570-044)
    • Certain Activated Carbon (A-570-904)
    • Certain Aluminum Foil (A-570-053)
    • Drawn Stainless Steel Sinks (A-570-983)
    • Magnesium Metal (A-570-896)
    • Stainless Steel Sheet and Strip (A-570-042)

CVD

  1. The People’s Republic of China
    • Certain Aluminum Foil (C-570-054)
    • Stainless Steel Sheet and Strip (C-570-043)

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.

The Office of the U.S. Trade Representative (“USTR”) released the final implementing regulations of the U.S.-Mexico-Canada Agreement (“USMCA”) on June 3, 2020, an important step for when the USMCA goes into effect on July 1, 2020. The implementing regulations cover the interpretation, application, and administration of the rules of origin, textile and apparel goods, and customs administration and trade facilitation.

Depending on the product in question, the USMCA rules of origin may or may not change from those currently applied under NAFTA. As a result, U.S. importers should not assume that NAFTA-eligible products will remain eligible under the USMCA (or vice versa) and should evaluate the new rules of origin carefully for their products.

Please contact Husch Blackwell’s International Trade and Supply Chain group with any questions or concerns regarding the USMCA or its implementing regulations posted by USTR.

The Office of the U.S. Trade Representative (“USTR”) announced on June 2, 2020 that it is initiating Section 301 investigations on Digital Services Taxes (“DSTs”) adopted or under consideration by Austria, Brazil, Czech Republic, the European Union (“EU”), India, Indonesia, Italy, Spain, Turkey, and the United Kingdom (“U.K.”). The Section 301 DST investigations could lead the U.S. to impose new punitive tariffs and could significantly raise global trade tensions.

USTR is soliciting public comments from parties and these must be submitted no later than July 15, 2020. Written comments should be submitted through the Federal eRulemaking Portal at http://www.regulations.gov under docket number USTR-2020-0022. According to the Federal Register notice, the USTR invites comments with respect to:

  • Concerns with one or more of the DSTs adopted or under consideration by the jurisdictions covered in these investigations.
  • Whether one or more of the covered DSTs is unreasonable or discriminatory.
  • The extent to which one or more of the covered DSTs burdens or restricts U.S. commerce.
  • Whether one or more of the covered DSTs is inconsistent with obligations under the WTO Agreement or any other international agreement.
  • The determination required under section 304 of the Trade Act, including what action, if any, should be taken.

Over the last couple of years, various governments have enacted or considered taxes on revenues generated by companies from providing digital services within those jurisdictions. While the proponents of DSTs argue that the tax corrects corporate taxation to cover previously untaxed or undertaxed revenues, the position of the Trump administration, including the USTR, is that DSTs unfairly discriminate against “large, U.S.-based tech companies” such as Amazon and Google. USTR’s announcement provides a brief but detailed overview of the current status of each of the named jurisdictions’ enacted or proposed DSTs.

USTR’s initiation of Section 301 investigations follow a period of intermittent tensions between the U.S. and some of its trading partners over proposed DSTs. In December 2019, the U.S. and France nearly began a trade war over the DST adopted by France, which USTR described as “unreasonable, discriminatory, and burdensome on U.S. commerce.” However, these tariffs were never implemented on imports of products from France. In January of this year, the Trump administration had also threatened the U.K. with tariffs on imports of British cars if the U.K. pressed forward with its DST.

A possible result of these new investigations will be the institution of additional tariffs on imports of products from each of the named countries but that remains to be seen and will depend in large part on the support or opposition to the institution of trade remedies in the comments filed on the record of these investigations.

Husch Blackwell continues to monitor the Section 301 investigations on Digital Services Taxes and will provide further updates as more information becomes available. We encourage clients and companies to review the USTR’s announcement and Federal Register notice and to contact Husch Blackwell’s International Trade and Supply Chain group with any questions or concerns.

The Commerce Department announced on June 2, 2020, that it is starting another  Section 232 investigation that could result in the imposition of tariffs or potentially other restrictions on imports of vanadium.  The agency stated that it will review and determine “whether the present quantities or circumstances of vanadium imports into the United States threaten to impair the national security.”

Vanadium is a chemical element with the symbol “V” and is assigned atomic number 23.   A general description of it is a hard, silvery-grey, malleable transition metal.  It is an artificially isolated element which is rarely found in its natural state, but one of its key properties once isolated artificially is to prevent oxidation.  Various applications that rely on vanadium include use in the production of ferrovanadium, which is a steel additive.  The chemical properties of vanadium also increase the strength of the steel and it is therefore used in products such as high-carbon steel alloys and high-speed tool steels for use “aircraft, jet en­gines, ballistic missiles, energy storage, bridges, buildings, and pipelines. Vanadium is a key component in aerospace applications due to its strength-to-weight ratio, the best of any engineered material,” Commerce said and “U.S. demand is supplied entirely through imports.”

This new 232 investigation is the result of the filing of a request by two domestic U.S. vanadium producers, AMG Vanadium and U.S. Vanadium, in November 2019.   The allegation claims that the “domestic industry is adversely impacted by unfairly traded low-priced im­ports, limited export markets due to value-added tax regimes in other vanadium producing countries, and the distortionary effect of Chinese and Russian industrial policies,” according to Commerce’s press release.

The notice of initiation, of the 232 investigation was published in the Federal Register on June 3rd.  Comments must be filed by July 20, 2020, and any rebuttal comments are due by August 17, 2020.  Those interested in submitting comments should ensure that it addresses the following:

  • the quantity of imports,
  • domestic production and capacity needed to meet national defense requirements, and
  • the impact of foreign competition on the vanadium industry, among other things.

Husch Blackwell continues to monitor the Section 232 investigations and will provide further updates as more information becomes available. If you believe your company may be affected by this investigation, please contact Husch Blackwell’s International Trade and Supply Chain group for assistance on how to submit comments.

U.S. Supply Chain

On June 2, 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.

The products and countries that have June anniversary months are the following:

  • Cold Drawn Mechanical Tubing from Germany, India, Italy, Korea, Switzerland and China
  • Glycine from India and Japan
  • Carbon and Alloy Seamless, Standard, and Line Pressure Pipe from Japan
  • Prestressed Concrete Steel Rail Tie Wire from Mexico
  • Certain Tool Chests and Cabinets from Vietnam and China
  • Laminated Woven Sacks from Vietnam
  • Chlorinated Isocyanurates from Spain and China
  • Finished Carbon Steel Flanges from Spain
  • Helical Spring Lock Washers from Taiwan
  • Various Products from the People’s Republic of China

As part of this annual review process, Commerce intends to select respondents based on an analysis of U.S. Customs and Border Protection (CBP) data for U.S. imports during the period of review which is released only to legal counsel for interested parties. 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 June 30, 2020.  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 reviews, please contact Husch Blackwell’s International Trade and Supply Chain group for assistance on how the annual review process works.

The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently announced the addition of 32 Chinese companies and 1 Chinese government agency to the Entity List, citing connections to items for military end-use and human rights abuses against Uighur Muslims in the Xinjiang region. The addition of these Chinese entities to the Entity List follows BIS’s rule changes that further restricted the supply of U.S. technology to Huawei and its affiliated entities. This action prohibits the export, reexport or in-country transfer of items subject to the Export Administration Regulations (“EAR”) to the named entities without authorization from the Department of Commerce.

Twenty-four of the companies, based in China, Hong Kong, and the Cayman Islands, were added because they allegedly support procurement of items for military end-use in China. The other nine entities, which includes China’s Ministry of Public Security’s Institute of Forensic Science, were said to be “complicit in human rights violations and abuses committed in China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uighurs, ethnic Kazakhs, and other members of Muslim minority groups in the Xinjiang Uighur Autonomous Region” and will face “new restrictions on access to U.S. technology.”

Husch Blackwell continues to monitor the export controls on China and will provide updates as they become available. We encourage clients and companies to review the linked announcements from BIS and to contact Cortney Morgan or Grant Leach of Husch Blackwell’s Export Controls and Economic Sanctions team with any questions or concerns.