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The Month in International Trade – February 2021

Client Alert | 18 min read | 03.03.21

In this issue:


This news bulletin is provided by the International Trade Group of Crowell & Moring. If you have questions or need assistance on trade law matters, please contact Jeff Snyder or any member of the International Trade Group.

Top Trade Developments

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Welcome to Crowell & Moring’s Export Controls Classroom! This Classroom is intended to provide insight into the significant challenges and potential compliance risks that export controls pose for global companies. The site contains various training resources and a schedule of upcoming presentations by Crowell & Moring practitioners. The Classroom will be updated regularly with new content.

Please click here for Upcoming Events/Webinars and On-Demand Resources.

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Latest U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures

Please click here anytime for the latest actions, covered products rate increases, and effective dates.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Spencer Toubia, Ru Xiao-Graham, Cherie Walterman, Sam Boone, Clayton Kaier

Latest on Section 301 Product Exclusions

Please click here anytime for the latest actions regarding Section 301 Product Exclusions.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Spencer Toubia, Ru Xiao-Graham, Cherie Walterman, Sam Boone, Clayton Kaier

Biden’s Trade Policy: USTR Nominee Katherine Tai’s Confirmation Hearing

On February 25, the Senate Finance Committee held a confirmation hearing for the nominee for the U.S. Trade Representative (USTR), Katherine Tai. Tai’s strong performance in the hearing demonstrated her poise and a depth of knowledge on the issues. She was well-prepared for Senators’ questions and is likely to receive a swift confirmation in the Senate within the next couple weeks.

In her remarks, Tai spoke of the worker-centric trade policy of the Biden Administration, and emphasized that U.S. trade policy going forward would go beyond tariff reduction and removal of trade barriers. She said trade policy had fallen into a pattern where manufacturers or farmers felt they were being sacrificed for the good of another group. Tai said she would endeavor to get out of this pattern to a place where stakeholders were not pit against one another. Rather than rising standards for workers and the environment, we were witnessing a race to the bottom. The forced labor issue was the crudest example of the race to the bottom. All of this would inform the United States’ re-think of trade policy strategy, and how it could be conducted in a way that lifted all boats, not just increasing the size of the pie.

Tai was not specific about the details of initiatives she would pursue as USTR aside from the high-level Biden administration priorities of resiliency in supply chains for critical and essential goods, multilateral engagement, reform at the World Trade Organization, and climate and environmental policy. However Tai and the committee senators were all in agreements that enforcement of USMCA should be a top priority for USTR.

For more, including a review of the issues Tai spoke on, please click here.

For more information: Robert Holleyman, Shelley Su, Frances Hadfield

European Commission Unveils New Trade Strategy

On February 18, 2021, the European Commission unveiled its new trade strategy. The strategy aims to address the economic fallout from the coronavirus, climate change, and growing international tensions, while also reaffirming support for a rules-based multilateral trading system. The proposed measures range from WTO reform and digital trade initiatives, to tackling forced labor by developing enforcement mechanisms and requiring companies to monitor supply chains.

Valdis Dombrovskis, Executive Vice President of the European Commission, stated that the EU is “pursuing a course that is open, strategic and assertive, emphasizing the EU’s ability to make its own choices and shape the world around it through leadership and engagement, reflecting our strategic interests and values.”

The announcement comes in the context of China’s economic rise and on the heels of the December, 2020 agreement in principle between the EU and China on negotiations for a Comprehensive Agreement on Investment (CAI). In 2020, China overtook the U.S. as the EU’s top trade in goods partner at $710 billion. An outcome spurred, in part, by China’s ability to recover from the economic impacts of COVID-19 more quickly than other major trading partners.

The ambitions new strategy highlights the EU’s appetite to take on a leadership role in a post-COVID trading system while offering an opportunity for increased transatlantic engagement with respect to China.

For an outline of the strategy, please click here.

For more information: John Brew, Jeff Snyder, Frances Hadfield, Clayton Kaier

CBP Section 321 – Domestic Warehouses and Fulfillment Centers Administrative Ruling

On February 18, 2021, U.S. Customs and Border Protection (CBP) released a one-pager on a July, 28 2020, Administrative Ruling related to domestic warehouses and fulfillment centers.

What is the Scope of this Ruling?

19 U.S.C. § 1321(a)(2)(c) enables CBP to admit qualifying merchandise duty- and tax-free provided that the merchandise is imported by “one person on one day” and has a total fair retail value in the country of shipment of $800 or less. On July 28, 2020, CBP issued an administrative ruling recognizing fulfillment centers and domestic warehouses as the “one person” for unsold merchandise. Under this ruling, foreign owners/sellers of unsold merchandise may also qualify as the “one person” provided their identity is presented to CBP and the total value of their merchandise imported on one day is $800 or less.

What is CBP Doing to Enforce?

Through informed compliance, CBP is working closely with its trade partners to identify and educate entities who are affiliated with large volumes of ineligible shipments. CBP may take enforcement action, including against egregious and repeat violators, including placing holds on ineligible shipments, revoking Section 321 privileges, or requiring formal entry until sustained compliance is achieved.

What Can You Do to Facilitate Compliance?

Domestic Warehouse and Fulfillment Center Consignees who receive over $800 of unsold merchandise in one day can coordinate with merchandise owners to help ensure their shipments comply with Section 321 regulations. Ø Merchandise Owners may qualify for Section 321 provided the total value of their shipments do not exceed $800 on one day, and their identity (first and last name or name of company) is presented to CBP via the manifest or Entry Type 86 filing. Ø Shippers and Carriers should refer to CBP’s CAMIR and CATAIR updates to ensure the merchandise owner’s identity is presented appropriately to CBP. See below examples.

For more information: John Brew, Frances Hadfield, Clayton Kaier

Uyghur Forced Labor Prevention Act Reintroduced by Congress

On February 18, 2021, the House reintroduced the Uyghur Forced Labor Prevention Act (see press and bill) in the 117th Congress. Sponsored by Representatives James McGovern (D-MA), Chris Smith (R-NJ), Thomas R. Suozzi (D-NY), Vicky Hartzler (R-MO), Tom Malinowski (D-NJ), Mike Gallagher (R-WI), and Jennifer Wexton (D-VA), the legislation updates H.R. 6210 from the 116th Congress and is introduced less than a month after accompanying legislation from Senators Marco Rubio (R-FL), Jeff Merkley (D-OR).

The legislation would:

  • Prohibit all imports from the Xinjiang Uyghur Autonomous Region (XUAR) of China unless the Commissioner of U.S. Customs and Border Protection can certify that the goods being imported to the U.S. are not produced, either wholly or in part, with forced labor and the Commissioner submits to Congress a report outlining such a determination;
  • Authorize the President to apply targeted sanctions on anyone responsible for the labor trafficking of Uyghurs and other Muslim ethnic minorities;
  • Require financial disclosures from U.S. publicly traded businesses about their engagement with Chinese companies and other entities engaged in mass surveillance, mass internment, forced labor, and other serious human rights abuses in the XUAR;
  • Directs the Secretary of State to submit to Congress a public determination whether the practice of forced labor or other human rights abuses targeting Uyghurs and other Muslim minorities in the XUAR constitute crimes against humanity or genocide, and directs the Secretary to develop a diplomatic strategy to address forced labor in the XUAR; and
  • Require a strategy report from the Forced Labor Enforcement Task Force (established by the United States-Mexico-Canada Agreement Implementation Act) and regular updates on the steps taken to enforce the import prohibition on forced labor made goods from the XUAR.

For more information: Joshua Boswell, Jeff Snyder, Frances Hadfield, Clayton Kaier

CBP Publishes FAQ Responses to Xinjiang Uyghur Autonomous Region WRO

In light of increased U.S. actions and rising global concerns over reports of forced labor in Xinjiang, U.S. Customs and Border Protection (CBP) has issued the following Q&A responses:
General

Proof of Admissibility

Due Diligence/Best Practices

Miscellaneous

For more information: John Brew, Jeff Snyder, David Stepp, Frances Hadfield, Maria Vanikiotis, Clayton Kaier

President Biden Imposes Sanctions & Export Controls on Myanmar in Response to Military Coup

In the first material sanctions-related action of the new U.S. Administration, on February 11, 2021, President Biden issued Executive Order 14014 (EO) imposing sanctions on Myanmar (Burma) in response to the February 1, 2021, military coup and subsequent detention of government leaders, politicians, and others there. The sanctions focus on the defense sector of the Burmese economy, its military, and current military government, but provide authority to expand the scope of the sanctions. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) subsequently sanctioned 10 individuals and three entities pursuant to the new authorities. Simultaneously, the Commerce Department’s Bureau of Industry and Security (BIS) tightened its existing licensing policy on Burma and previewed a potential substantial expansion of future export controls in the event the situation deteriorates further.

For more, please click here.

For more information: Carlton Greene, Jeff Snyder, Dj Wolff, Brian McGrath, Edward Goetz

Court of International Trade Orders Consolidate Section 301 Lawsuits and Orders United States to Answer in Case by March 12

On February 10, 2021, the CIT issued a procedural order that requires all Section 301 cases to receive notice under a master case named “In Re Section 301 Cases, CIT Ct. No. 21-cv-00052.” The decision was made in an effort to streamline the more than 3,500 lawsuits the CIT has received from importers since September of last year. Additionally, the order requires a master answer from the United States to Answer Plaintiffs’ Complaints in a general manner and defend against the pending lawsuits by March 12, 2021.

For more information: John Brew, Dan Cannistra, Frances Hadfield, Brian McGrath, Sam Boone, Clayton Kaier

World Trade Organization (WTO) Dispute Panel Delays Final Ruling on Section 232 Tariffs

On February 8, 2021, a WTO dispute resolution panel notified parties that it would delay it’s ruling on the United States’ Section 232 tariffs until the second half of 2021. The tariffs, which were imposed on the basis of national security, received complaints from China, India, Norway, Russia, Switzerland, Turkey, and the European Union. The announcement comes after a 2019 decision in favor of Russia’s right to block road and rail transport to Ukraine for national security purposes and in the context of a new presidential administration.

For more information: John Brew, Frances Hadfield, Spencer Toubia, Edward Goetz, Clayton Kaier

U.S. Court of International Trade Upholds Section 232 Tariffs

On February 4, 2021, a three-judge panel at the CIT issued a unanimous decision to uphold Section 232 tariffs on steel and aluminum based on national security concerns. The tariffs, which were imposed in 2018, were for 25% duties on steel and 10% duties on aluminum. The CIT held that the tariffs did not violate Section 232 of the Trade Expansion Act of 1962 or the Administrative Procedure Act (APA).

President Trump set these increased import duties on steel and aluminum pursuant to Presidential Proclamation 9705. The Proclamation was criticized by steel and aluminum importers and politicians over concern that it was an overbroad interpretation of national security in the context of Section 232.

For more information: John Brew, Frances Hadfield, Spencer Toubia, Edward Goetz, Clayton Kaier

Customs Rulings of the Week

For more information, contact: Frances Hadfield, Rebecca Toro Condori

Crowell & Moring Welcomes

Michael Bowen is an associate in Crowell & Moring’s International Trade Group and a resident in the firm’s Washington, D.C. office. He joins Crowell after serving as a senior international trade analyst for the U.S. Department of Commerce at the International Trade Administration. He spent four years in the enforcement & compliance (E&C) division, where he conducted several high-profile AD/CVD investigations involving both market and non-market economy countries. At Crowell, his practice focuses on advising clients on all areas of trade remedies, import regulatory compliance, and international trade litigation. His experience covers a broad range of trade and customs issues, including those related to antidumping (AD) and countervailing duty (CVD) investigations, administrative reviews, and litigation involving the U.S. International Trade Commission. His work also encompasses complex scope exclusion requests before the U.S. Department of Commerce, and matters related to tariffs imposed pursuant to the various trade remedy measures under sections 201 and 301 of the Trade Act of 1974 and section 232 of the Trade Expansion Act of 1962.

Laurel Saito is a new senior law clerk in Crowell & Moring’s International Trade Group and a resident in the firm’s Washington, D.C. office. Laurel graduated cum laude from Georgetown University Law Center. While in law school, she studied abroad in London with a consortium program that brought together law students and professors from over ten countries.

Kuba Wisniewski is a new first-year associate in Crowell & Moring’s International Trade Group and a resident in the firm’s Washington, D.C. office. Kuba graduated from Harvard Law School. Prior to that he was a Young Graduate Trainee at the European Space Agency, Department of Industry, Procurement, and Legal Services.

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