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The Month in International Trade – January 2021

Client Alert | 21 min read | 02.02.21

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.

We would love to hear your questions, comments, and suggestions regarding future training sessions. Click here to connect with our team.

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

CBP Issues Withhold Release Order on Cotton and Tomato Products Produced in Xinjiang

On January 13, 2020, U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) for cotton and tomato products from Xinjiang, an autonomous territory in northwest China. This is the fourth WRO that CBP has issued since the beginning of Fiscal Year 2021, and the second on products originating in Xinjiang. Eight of the 13 WRO that CBP issued in Fiscal Year 2020 were on goods made by forced labor in China.

Notably, while previous actions have targeted specific items and firms originating from and having a presence in Xinjiang, this is the first WRO to target entire product types. Compliance concerns raised by the apparel industry have been met with guidance from CBP.

The Agency’s Press Release included 6 out of the 11 possible forced labor indicators:

  • Debt bondage
  • Restriction of movement
  • Isolation
  • Intimidation and threats
  • Withholding of wages
  • Abusive living and working conditions

Additional forced labor indicators include: Abuse of vulnerability, deception, physical and sexual violence, intimidation and threats, and excessive overtime.

WROs are issued by the U.S. government when information reasonably but not conclusively indicates goods were made in whole or in part using forced labor. Merchandise detained under a WRO order must be exported immediately or a substantial submission made that provides specific information showing that the goods were not made with forced labor. To obtain a release of any shipment that has been subjected to a WRO, a certificate of origin along with this detailed statement regarding the merchandise’s production and supply chain origin must be submitted to CBP. CBP makes a determination on a case-by-case basis.

The Press Release is available here. 

The order is the latest U.S. action addressing rising global concerns over reports of forced labor in Xinjiang.

For more information on actions addressing human rights and forced labor abuses, please see our January 12 post or contact John Brew, Jeffrey Snyder, Frances Hadfield, or Clayton Kaier

U.K. and Canada Announce New Measures to Combat Forced Labor and Human Rights Violations

On January 12, 2021, the United Kingdom’s Foreign Secretary, as well as Canada’s Minister of Foreign Affairs and Minister of Small Business, Export Promotion, and International Trade, made parallel announcements outlining new measures to combat forced labor and human rights violations. The announcements come in the context of rising global concerns over reports of forced labor in Xinjiang, an autonomous territory in northwest China.

The United Kingdom’s measures to combat forced labor include: 

  • A review of export controls as they apply to Xinjiang. The review will determine which additional products will be subject to export controls in the future.
  • The introduction of financial penalties for organizations, with revenue of at least 36 million pounds (~$49 million), who fail to meet their statutory obligations to publish annual modern slavery statements, under the Modern Slavery Act.
  • Detailed guidance to UK business setting out the specific risks faced by companies with links to Xinjiang and underlining the challenges of effective due diligence there.
  • Guidance and support for all UK public bodies to use public procurement rules to exclude suppliers where there is sufficient evidence of human rights violations in supply chains. Compliance will be mandatory for central government, non-departmental bodies, and executive agencies.
  • A Minister led campaign of business engagement to reinforce the need for UK businesses to take action to address the risk.

Canada’s measures to combat forced labor include:

  • The prohibition of imports of goods produced wholly or in part by forced labor as prescribed under the Customs Tariff Act.
  • Requiring Canadian companies that are 1) sourcing directly or indirectly from Xinjiang or from entities relying on Uyghur labor, 2) established in Xinjiang, or 3) seeking to engage in the market, to sign an Integrity Declaration on Doing Business with Xinjiang Entities prior to receiving services and support from the Trade Commissioner Service (TCS).
  • A Business Advisory on Xinjiang-related entities.
  • Enhanced advice to Canadian businesses (See Global Affairs Canada business advisory).
  • Export controls including the denial of export licenses if there is a substantial risk that the export would result in a serious violation of human rights or international human rights law under the Export and Import Permit Act (EIPA).
  • Increasing awareness for Responsible Business Conduct linked to Xinjiang.
  • A Study on forced labor and supply chain risks.

The announced measures continue a global trend of new policies targeting forced labor and human rights abuses.

The Press Releases are available here:

UK Press Release
Canadian Press Release

For more information on the United Kingdom and Canada’s announcements, as well as similar actions under the U.S. Magnitsky Act, please contact Michelle Linderman, Dj Wolff, Frances Hadfield, Clayton Kaier

Uyghur Forced Labor Prevention Act Re-Introduced

On January 28 , 2021, Senators Rubio and Merkley re-introduced the Uyghur Forced Labor Prevention Act (see press and bill) with 27 additional co-sponsors. The bill includes important changes from the last Congress that addresses some of the concerns from the business community, including:

  • The effective import ban on goods originating from Xinjiang goes into effect 300 days after the bill becomes law (vs. 120 days in the legislation from last year)
  • Requires the administration to issue guidance to importers on best practices/due diligence and on the of type of evidence to demonstrate that goods are not made with forced labor
  • Sets out a clearer process by which CBP may issue exemptions to the import ban
  • Requires the administration to develop a comprehensive enforcement strategy (with public comment) and a diplomatic strategy
  • Does not include the SEC disclosure requirements in last year’s bill

Also, a multi-association letter was sent, which asked for an approach similar to some of the changes outlined above.  The timing for this legislation remains unclear, but the basic expectation is that this could potentially move quickly in the coming months.  Some House Democrats are expected to oppose some of the amendments, so it remains unclear if that might complicate passage.

Regardless, of the outcome of this legislation, we don’t expect this will affect the existing withhold release order (WRO) that CBP has issued for cotton products from Xinjiang, and it is likely the Biden team will look to impose additional WROs on Xinjiang or entities elsewhere.

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

Congress Passes the Anti-Money Laundering Act of 2020, Significant Changes to the Bank Secrecy Act Ahead

On January 1, 2021, the Senate followed the House and voted to override President Trump’s veto of the National Defense Authorization Act for Fiscal Year 2021 (NDAA). As is typical, the NDAA touched on a wide range of legal areas, including numerous new government contracts requirements, as well as a number of sanctions and export control related features, which will be summarized separately. One of the core features of the NDAA, however, is Division F, The Anti-Money Laundering Act of 2020 (AMLA or the Act), which makes sweeping reforms to the Bank Secrecy Act (BSA) and other anti-money laundering rules. The following is a summary of the most significant changes to the AML legal landscape, including:

  • New beneficial ownership requirements and the creation of a registry
  • Establishment of national AML and counter-terrorism priorities
  • Creation of a new Office of Domestic Liaison within the Financial Crimes Enforcement Network (FinCEN)
  • Broader Department of Justice (DOJ) and Department of the Treasury (Treasury) subpoena authority for non-U.S. bank records
  • Expanded definition of “financial institution” to include “dealers in antiquities” and “virtual currencies”
  • Review by FinCEN of whether to implement a “no-action letter” program
  • Increased BSA/AML penalties
  • Mandatory U.S. Treasury Department review of currency transaction report (CTR) and suspicious transaction report (SAR) requirements
  • New SAR pilot program to allow regulated financial institutions to share SARs with their foreign branches, subsidiaries, and affiliates
  • Safe harbor for compliance with “keep open” letters
  • New whistleblower program

For all the details, please click here.

For more information, contact: Carlton Greene, Caroline Brown, Nimrod Aviad, Kelly Currie, Rebecca Ricigliano, Paul Rosen, Nicole Succar, Brian McGrath

Vietnam Section 301 Currency Report

On January 15, 2021, The U.S. Trade Representative (USTR) released a Section 301 report on Vietnam’s currency valuation practices. The report follows the conclusion of public hearings and submission of rebuttal comments in late December of 2020 and early January of 2021.

Notably, USTR’s press release states that USTR is not taking any specific actions in connection with the findings at this time but will continue to evaluate all available options.

Vietnam Currency Investigation Conclusions

  1. Vietnam’s acts, policies, and practices that contribute to undervaluation of its currency, including excessive foreign exchange (FX) market interventions and other related actions, taken in their totality, are unreasonable; and
  2. Vietnam’s acts, policies, and practices that contribute to undervaluation of its currency, including excessive FX market interventions and other related actions, taken in their totality, burden or restrict U.S. commerce.

The report is available here.

The Federal Register Notice is available here. 

For more information on the investigation, including hearing transcripts and analysis, please refer to our previous two posts below.

Vietnam Section 301 Hearing Transcripts
USTR Launches Section 301 Investigation Targeting Imports from Vietnam

For more information, contact: Evan Chuck, Robert LaFrankie, Frances Hadfield, Clayton Kaier

National Security: Executive Order Prohibits Transactions with Eight Chinese Software Applications

On January 5, 2021, President Trump issued an Executive Order prohibiting transactions “with persons that develop or control” eight “Chinese connected software applications”, including Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office (the “order” or the “EO”). The prohibitions, which also apply to subsidiaries of the software developers, would go into effect 45 days from the date of the order, February 19, at the earliest. The order directs the Secretary of Commerce to identify the transactions and targets of the prohibitions not earlier than 45 days after the date of the order. Notably, these dates fall in the Biden Administration, and it’s unclear whether the new Administration will elect to implement the order, extend the date of implementation, or revoke the order entirely. There are no current restrictions on dealing with the listed applications or their developers or owners.

For more, please click here.

For more information, contact: Caroline Brown, Evan Chuck, Robert Holleyman

FCC Publishes Telecommunications Supply Chain Security Rule

On January 13, 2021, the Federal Communications Commission (FCC) published a final rule that requires advanced communications providers to review their equipment and services within their networks and either: (1) certify that they do not include any covered equipment; or (2) file an annual report with the FCC that identifies covered communications equipment or services (as described below), details information about the equipment/service and their removal or replacement plan, and justifies the use of the equipment/service, among other things.

Government contractors that have to make a representation under Section 889(a)(1)(B) of the FY2019 NDAA are challenged if they operate in rural locations where there may not be providers that do not use covered equipment or services. This rule may ultimately alleviate that issue for contractors by requiring and providing funding for removal and replacement of covered equipment and services. The new rule, which implements the Secure and Trusted Communications Networks Act of 2019, is effective March 15, 2021, with limited exceptions for the required reporting and parts of the rule’s removal, replacement, disposal, and reimbursement requirements.

For more, please click here.

For more information, contact: Caroline Brown, Evan Chuck, Robert Holleyman

Not Your Parents' IT: New Interim Rule to Scrutinize Acquisition of IT Products and Services from Foreign Adversaries

On January 19, 2021, Commerce has published an interim final rule (IR) which, effective March 22, 2021, will implement the May 15, 2019 Executive Order 13873 that relied on the International Emergency Economic Powers Act (IEEPA) to authorize sweeping power to block or undo any transaction – including use, purchases or importation – of virtually any “information and communications technology or services [ICTS] designed, developed, manufactured, or supplied, by persons owned by, controlled by , or subject to the jurisdiction or direction of a foreign adversary.” The IR (15 C.F.R. Part 7) provides greater clarification than the November 27, 2019 proposed rule (discussed here), but fails to significantly reduce the breadth, ambiguity and uncertainty this new transaction review scheme will have on the global information technology supply chain.

For more, please click here.

For more information, contact: Caroline Brown, Evan Chuck, Robert Holleyman

Parties Allowed to Apply for EU Reviews of Anti-Dumping/Anti-Subsidy Measures Following Brexit

On January 18, the EU published a Notice allowing interested parties to apply for reviews of anti-dumping and anti-subsidy measures on imports of products from third countries into the EU following the withdrawal of the U.K. from the EU.

The U.K. withdrew from the EU on 31 January 2020 and the transition period ended on 31 December 2020. EU trade remedy measures will now apply on imports from third countries into the 27 EU Member States, whereas the U.K. will be applying trade remedy measures which the U.K. grandfathered.

The withdrawal of the U.K. per se, in the absence of any such additional evidence, is not a sufficient basis for a review to be initiated. Interested parties willing to apply for a review have to submit evidence that the measures would have been significantly different if they had been based on information excluding the U.K.

For more information, contact: Vassilis Akritidis; Elena Klonitskaya

Customs Rulings of the Week

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

Crowell & Moring Webinar

International Trade in 2021: What’s Ahead

The incoming Biden administration faces a number of serious international trade issues, including increased tensions with China, the implementation of Brexit, and last, but far from least, a global pandemic that continues to impact global supply chains, mobility, and many other aspects of our interconnected world. Join us as we identify these issues along with many other international trade opportunities and risks likely to arise for your businesses in the course of 2021.

On Wednesday, February 17, 2021 from 11:00 am – 12:30 pm Eastern, our Crowell & Moring team will discuss predictions for the coming year. Topics will include likely trends and issues in the U.S., EU, and Asia including: 

  • Global Mobility
  • Supply Chain Risk Management
  • Trade Policy
  • EU Trade and Brexit
  • Customs
  • Trade Remedies
  • Section 337 Unfair Import Investigations
  • CFIUS and Team Telecom
  • Sanctions and Export Controls
  • Anti-Money Laundering (AML)

Presenters will include members of our International Trade Practice and Crowell & Moring International based in Washington, D.C., Los Angeles, Brussels, London, and Singapore. We hope you can join us for this webinar.

Register here.

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Insights

Client Alert | 3 min read | 12.13.24

New FTC Telemarketing Sales Rule Amendments

The Federal Trade Commission (“FTC”)  recently announced that it approved final amendments to its Telemarketing Sales Rule (“TSR”), broadening the rule’s coverage to inbound calls for technical support (“Tech Support”) services. For example, if a Tech Support company presents a pop-up alert (such as one that claims consumers’ computers or other devices are infected with malware or other problems) or uses a direct mail solicitation to induce consumers to call about Tech Support services, that conduct would violate the amended TSR. ...

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