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The Month in International Trade – June 2021

Client Alert | 25 min read | 07.12.21

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

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

Bureau of Industry and Security (BIS) Adds Five Chinese Entities to Entity List for Participating in China’s Forced Labor Campaign Against Muslims in Xinjiang

On June 24, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) added five Chinese entities to the Entity List for partaking in the forced labor of Muslim minority groups from Xinjiang, an autonomous territory in northwest China. This action by the BIS – which specifically targets the five entities’ ability to access any commodities, software, and technology subject to the Export Administration Regulations (EAR) – is part of a continued effort from the U.S. government to act against China’s repression of Uyghurs and other Muslim minority groups from the Xinjiang region. The five entities to be added to the Entity List are the following:

  • Hoshine Silicon Industry (Shanshan) Co., Ltd.
  • Xinjiang Daqo New Energy Co., Ltd.
  • Xinjiang East Hope Nonferrous Metals Co., Ltd.
  • Xinjiang GCL New Energy Material Technology Co., Ltd.
  • Xinjiang Production and Construction Corps (XPCC)

The recent Entity List ruling is a supplement to other related designations from October 2019, June 2020, and July 2020. The rulings have added a total of 53 parties to the Entity List implicated for human rights abuses of ethnic minorities from Xinjiang, of which 15 parties were implicated for human rights abuses related to the forced labor of ethnic minorities from Xinjiang.

The Entity List is a tool used by the BIS to restrict the export, reexport, and transfer (in-country) of items subject to the EAR to entities believed to be participating in actions that go against the interests of the United States’ national security or foreign policy. Additional licenses are required for the exportation, re-exportation, and transfer (in-country) of commodities, software, and technology to any listed entities. No license exceptions apply and license applications are subject to a presumption of denial.

The Press Release is available here.

For more information on actions addressing human rights and forced labor abuses, contact our team and see previous posts below.

BIS Adds Chinese Supercomputing Centers and Companies to Entity List
BIS Adds 33 Chinese Companies to the Entity List

For more information: Jeff Snyder, Chandler Leonard, Edward Goetz, Martin Yerovi

CBP Issues Withhold Release Order (WRO) On Certain Silica-Based Products From Xinjiang, PRC

On June 24, 2021, U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against Hoshine Silicon Industry Co. Ltd. – a silica manufacturing company located in China’s Xinjiang Uyghur Autonomous Region (XUAR) – and its subsidiaries on the basis of forced labor in the entity’s manufacturing practices. The WRO instructs CBP personnel at all U.S. ports of entry to detain silica-based products as well as materials and goods derived or produced from silica by Hoshine and its subsidiaries. During a press conference held today, CBP indicated that direct imports of these products over the past 2.5 years accounted for approximately $6 million dollars. Notably, the WRO would also apply to polysilicon, which is a derivative of silica and a major component in solar panels, electronics, and other related goods. CBP indicated that downstream products accounted for approximately $150 million dollars of imports over the last 2.5 years.

The WRO was issued after an investigation into silica-based products imported from the Xinjiang region identified the following 2 of 11 possible indicators of forced labor in the company’s production process:

  • Restriction of movement
  • Intimidation and threats

This WRO is the latest in a continued series of actions from the United States to exclude goods suspected of utilizing forced labor from its supply chains. CBP’s forced labor investigations have produced six WROs in Fiscal Year 2021 – including a WRO on cotton and tomatoes from the entire Xinjiang region and another against Chinese fishing fleet Dalian Ocean Fishing Co., Ltd. Additionally, 8 of the 13 WROs issued in Fiscal Year 2020 were on products made by forced labor from China.

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. Currently, there is no standard of review for CBP to use in evaluation these submissions and CBP makes a determination on a case-by-case basis. However, pending legislation (H.R.1155 – Uyghur Forced Labor Prevention Act), if passed, proposes a clear and convincing standard of review similar to CAATSA Section 321.

The Press Release is available here.

For more information on actions addressing WRO submissions, social responsibility, and forced labor audits, contact our team and see previous posts below.

Customs and Border Patrol (CBP) Issues Withhold Release Order (WRO) Against Chinese Fishing Vessels
CBP Issues Withhold Release Order on Cotton and Tomato Products Produced in Xinjiang

For more information: David Stepp, John Brew, Jeff Snyder, Frances Hadfield

G7 Announces Joint Actions on Forced Labor in Global Supply Chains

On June 13, 2021, leaders from the U.S., U.K., Canada, Japan, France, Germany, and Italy (the G7) — announced their joint actions to support and strengthen free and fair trade. The joint actions emphasized efforts to combat forced labor in global supply chains as well as other initiatives to review trade policies to further women’s economic empowerment, increase sustainability by aligning trade practices with the Paris agreement, and modernize the World Trade Organization (WTO).

The G7 included the removal of forced labor from global supply chains as a major concern in their communiqué. The group specifically referred to state-sponsored forced labor of vulnerable and minority groups in the agriculture, solar, and garment sector supply chains. Notably, these are the same sectors that have drawn international scrutiny and government action in Xinjiang, China.

The United States has already taken steps to exclude goods suspected of utilizing forced labor in their supply chains. On January 13, 2021, Customs and Border Protection (CBP) issued a Withhold Release Order on cotton and tomato products from Xinjiang, and on May 4, 2021, CBP seized nearly 4 million disposable gloves following the receipt of information that led to a forced labor finding. On May 28, 2021, CBP also issued a WRO against Dalian Ocean Fishing Co., Ltd. based on information that reasonably indicated the use of forced labor in that entity’s fishing operations. CBP has begun detaining tuna, swordfish, and other seafood harvested by vessels owned or operated by the Dalian Ocean Fishing Co., Ltd.

As next steps, the G7 Trade Ministers intend to collectively identify cooperative efforts towards eradicating all forms of forced labor in global supply chains ahead of the G7 Trade Ministers’ meeting in October 2021.

Alongside efforts to remove forced labor from global supply chains, the G7 emphasized other initiatives to strengthen free and fair trade, which include:

  • Reviewing trade policies to ensure the economic empowerment of women, which comes via developing a strong evidence base of gender-disaggregated data and analysis;
  • Transitioning to more sustainable supply chains by acknowledging the risk of carbon leakage and aligning trading practices with commitments under the Paris agreement; and
  • Modernizing the WTO to promote fair competition and shared prosperity. The modernization effort involves updating the global trade rulebook to reflect the new global economy and protect against unfair practices as well as supporting the interests of the least-developed and low-income countries.

A copy of the press release is available here.

For more information on actions regarding forced labor abuses and global supply chain policies, contact our team and see previous posts below.

CBP Issues Withhold Release Order on Cotton and Tomato Products Produced in Xinjiang
CBP Seizes Millions of Disposable Gloves Following Forced Labor Finding Against Top Glove Corporation

For more information: John Brew, Frances Hadfield, Martín Yerovi

House and Senate Advance Competing Trade Legislation on Generalized System of Preferences (Gsp), Miscellaneous Tariff Bill (Mtb), and Section 301

On June 17, 2021, the House Ways and Means Committee advanced the Generalized System of Preferences and Miscellaneous Tariff Bill Modernization Act of 2021. The announced legislation follows Senate passage of similar GSP and MTB provisions, as well as Section 301 provisions in the Trade Act of 2021 as part of the omnibus U.S. Innovation and Competition Act. Notably, GSP and MTB renewal are considered revenue measures and therefore must originate in the House. The procedural faux pas was described as “inconsistent with the idea that the Ways and Means Committee would go first” by Ways and Means Committee Chairman Richard Neal (D-MA). While the renewal of GSP, MTB, and Section 301 Exclusions have received broad bipartisan support, procedural hurdles relating to revenue legislation and differing bill text will need to be resolved in conference before a vote can be expected.

Key differences exist between the House and Senate text. A comparison of notable provisions is provided below as outlined in congressional summaries and the legislative text:

Generalized System of Preferences

Renewal Timeline

House

Senate

Extends GSP through 2024

Extends GSP through 2027


Retroactive Benefits

House

Senate

GSP is retroactive to the date of the previous GSP expiration allowing entries to be reliquidated.

GSP includes a retroactivity provision allowing importers to get refunds on duties paid since the previous GSP expired on December 31, 2020.


New Requirements and Eligibility Criteria

House

Senate

  • Updates the GSP labor criteria to effectively enforce internationally recognized worker rights and expands the definition to include elimination of discrimination in occupation and employment, and the elimination of violence against workers, including gender-based violence and harassment.
  • Adds new GSP criteria on human rights, rule of law, political pluralism, anti-corruption, and economic development.
  • Adds new annual country eligibility reviews and transparency requirements for administrative decisions made under the program.
  • Enhances public access and participation in the program by creating a new process to receive petitions at any time and setting maximum timelines for reviews to be completed.
  • Requires a study on the rules of origin, women’s economic empowerment, and GSP utilization rates to help the least developed countries receive more of the benefits.
  • Establishes a mechanism to review beneficiary country’s laws related to worker and gender rights. Encourages the adoption of gender-based data collection measures to help create greater equitable economic development outcomes.
  • Adds new mandatory eligibility criteria, which countries must meet to be eligible for GSP, on human rights and the environment.
  • Adds new discretionary criteria, which the President takes into account when designating a country as a GSP beneficiary, on the environment, women’s economic empowerment, rule of law, and digital trade.
  • Updates the definition of “internationally recognized worker rights” to include the elimination of discrimination in occupation and employment, which aligns that definition with USMCA and other trade agreements.
  • Provides a new requirement for regular country reviews and includes additional transparency requirements for administrative decisions made under the program.
  • Provides new reporting requirements on how GSP promotes worker rights and women’s economic empowerment.
  • Requires the USITC to study GSP utilization rates, rules of origin, and article eligibility rules


Miscellaneous Tariff Bill

Renewal Timeline

House

Senate

Extends MTB through 2023 and reauthorizes the AMCA for two MTB cycles-through 2027.

Extends MTB through 2023 and reauthorizes the AMCA for two MTB cycles-through 2027.

 

Retroactive Benefits

House

Senate

MTB is retroactive for four months (~ 120 days) before the enactment of the bill.

MTB, Section 21701(b) gives retroactive effect for 120 days before enactment of the bill.

 

New Requirements and Eligibility Criteria

House

Senate

  • Aims to support domestic manufacturers and limit benefits for imports from China by excluding finished products from future MTB cycles.
  • The text includes 1363 products.
  • N/A
  • The text includes 1423 products.

 

Section 301

Renewal Timeline

House

Senate

No legislation introduced

Not later than 120 days after the date of the enactment of the Act, The Trade Representative, in consultation with such other Federal agencies as the Trade Representative considers appropriate, shall prescribe regulations regarding the criteria that the Trade Representative will apply and the evidence the Trade Representative will evaluate in deciding exclusion requests.


Retroactive Benefits

House

Senate

No legislation introduced
  • USTR will reinstate all exclusions for entries filed on or before December 31, 2022, with retroactivity for certain liquidations and reliquidations.
  • Any entry of a covered article on which duties were paid under section 301(b) of the Trade Act of 1974 (19 U.S.C. 2411(b)) and to which a covered duty exclusion would have applied if the entry were made on December 31, 2020, that was made—(i) after December 31, 2020, and (ii) before the date of the enactment of this Act, shall be liquidated or liquidated as though such entry occurred on such date of enactment.


New Requirements and Eligibility Criteria

House

Senate

  • No legislation introduced

Criteria for consideration in implementing the exclusion process include:

  • (A) Whether the failure to grant the exclusion would result in severe economic harm to the requester.
  • (B) Whether the article or a reasonable substitute is not commercially available to the requester.
  • (C) Whether the imposition of the duty with respect to the article would unreasonably increase consumer prices for day-to-day items consumed by low- or middle-income families in the United States.
  • (D) Whether the imposition of the duty would have an unreasonable impact on the manufacturing output of the United States.
  • (E) Whether the imposition of the duty would have an unreasonable impact on the ability of an entity to fulfill contracts or to build critical infrastructure.
  • (F) Whether the failure to grant the exclusion is likely to result in a particular entity or entities having the ability to abuse a dominant market position.

Not later than 90 days after imposing any duty under section 301(b), the Trade Representative, in consultation with such other Federal agencies as the Trade Representative considers appropriate, shall publish a notice in the Federal Register regarding the criteria that the Trade Representative will apply and the evidence it will evaluate in determining whether a request for exclusion from such duty satisfies the requirements of the exclusion process under subsection


The full text of the Generalized System of Preferences and Miscellaneous Tariff Bill Modernization Act of 2021 is available here.

The full text of the Trade Act of 2021 is available here.

For more information on the Generalized System of Preferences, Miscellaneous Tariff Bill, or Section 301 please contact our team and see previous posts below.

Generalized System of Preferences (GSP) Archives
Miscellaneous Tariff Bill Archives
Section 301 Exclusion Process Archives
Section 301 Tariffs Archives

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

ITC Makes First Affirmative Determination Citing Currency Undervaluation as a Countervailable Subsidy

On June 23, 2021, the U.S. International Trade Commission (ITC) announced its final determination in the antidumping and countervailing duty investigation into passenger vehicle and light truck tires (PVLT). The ITC voted in the affirmative, finding that imports of products from Vietnam harmed the domestic industry. The decision marks the final hurdle for Commerce to impose duties starting in July.

The determination follows the May 24, 2021, final determination by Commerce, which also ruled in the affirmative, and is the first time that the Currency Rule has been used in an affirmative final determination by the ITC.

For more information on the Currency Rule please reach out to our team and see previous posts below.

Department of Commerce Issues First Analysis of Currency Undervaluation as a Countervailable Subsidy

 

For more information: Robert LaFrankie, Frances Hadfield, Clayton Kaier

U.S.-EU Aim to Resolve Excess Capacity Issues and Section 232 Tariffs by the End of the Year

On June 15, 2021, the U.S. and EU announced a commitment to address steel and aluminum excess capacity issues including section 232 tariffs and retaliatory measures by the end of the year. This announcement follows the May 17th, 2021 statement from the European Commission Executive Vice President’s outlining the EU’s decision to temporarily suspend the increase of its rebalancing measures related to the Unites States’ Section 232 steel and aluminum tariffs.

The commitment, as outlined by the U.S.-EU Summit Statement and European Commission President, explains that the U.S. and EU:

  • Will engage in discussions to allow the resolution of existing differences on measures regarding steel and aluminum before the end of the year.
  • Will work together to resolve tensions arising from the U.S. application of tariffs on imports from the EU under U.S. Section 232, and will work towards allowing trade to recover from its 2020 lows and ending the WTO disputes.
  • They are committed to ensuring the long-term viability of their steel and aluminum industries, and to addressing excess capacity.
  • Will create a working group to discuss the overcapacity issue and the Section 232 tariffs.

The full text of the U.S.-Eu Summit Statement is available here.

For more information on Section 232, U.S.-EU Trade, and WTO developments please contact our team and see previous posts below.

Section 232 Posts
WTO Posts
EU Retaliatory Tariff Posts

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

U.S. and EU Agree on Framework to Resolve Large Civil Aircraft Dispute

On June 15, 2021, Unites States Trade Representative Katherine Tai and European Commission Executive Vice President Valdis Dombrovskis announced an outline to resolve the 20 year old large civil aircraft dispute and suspend tariffs on $115 billion in related products for a period of five years. The announcement follows President Biden’s first in person meetings with European Commission President Ursula von der Leyen and European Council President Charles Michel and in the context of warming trade relations with the EU. Additionally, Ways & Means Committee Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) have issued positive statement on the agreement.

The below general principles, which is outlined by USTR’s press release, will be the general guide for cooperation between the United States and the European Union:

  1. The two sides will establish a Working Group on large civil aircraft, to be led by each side’s respective Minister responsible for trade. The Trade Ministers will consult at least yearly. The Working Group will meet on request or at least every 6 months.
  2. The Working Group will seek to analyze and overcome any disagreements that may arise between the sides. The Working Group will collaborate on and continue discussing and developing these principles and appropriate actions.
  3. Each side intends to provide any financing to its LCA producer for the production or development of large civil aircraft on market terms.
  4. Each side intends to provide any funding for research and development (R&D) for large civil aircraft to its LCA producer through an open and transparent process and intends to make the results of fully government funded R&D widely available, to the extent permitted by law. Each side intends not to provide R&D funding or other support that is specific, to its LCA producer in a way that would cause negative effects to the other side.
  5. The two sides will continue discussions to further operationalize paragraphs 3 and 4, which apply to all levels of government.
  6. Each side intends to provide any financing to its LCA producer for the production or development of large civil aircraft on market terms.
  7. Each side intends to collaborate on jointly analyzing and addressing non-market practices of third parties that may harm their respective large civil aircraft industries. The two sides will implement the annexed understanding on cooperation on non-market economies through the Working Group.
  8. Each side intends to suspend application of its countermeasures for a period of 5 years, in the expectation that the other side will contribute to establishing a level playing field and to addressing shared challenges from non-market economies.
  9. The two sides will continue to confer on addressing outstanding support measures.

The full press release is available here.

The full framework text is available here.

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

United States Trade Representative (USTR) Announces and Immediately Suspends Tariffs in Section 301 Digital Services Taxes (DSTS) Investigation

On June 2, 2021, United States Trade Representative (USTR) Katherine Tai announced the conclusion of the Section 301 Digital Services Taxes (DSTs) investigations on Austria, India, Italy, Spain, Turkey, and the United Kingdom. The investigation determined to impose additional tariffs of 25 percent on certain products from the six countries, as noted in the Notices of Action below:

Notably, USTR also determined to suspend the application of the additional duties for up to 180 days in order to provide more time to complete ongoing multilateral negotiations pertaining to international taxation issues through the OECD and G20 processes.

This decision comes a year after USTR first initiated investigations into DSTs in the six jurisdictions as well as four others—which included Brazil, the Czech Republic, the European Union, and Indonesia. In January 2021, USTR determined that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom both discriminated and burdened U.S. companies and were not in line with international taxation principles. Two months later in March 2021, USTR announced proposed trade actions in the six countries as well as the termination of the remaining four investigations in Brazil, the Czech Republic, the European Union, and Indonesia, where they were found to have not implemented the DSTs under consideration.

The Press Release is available here.

For more information on Section 301 investigations, contact our team and see previous posts below.

USTR Launches Section 301 Investigation Targeting Imports from Vietnam
USTR Launches 301 Investigations into Digital Services Taxes

For more information: John Brew, Frances Hadfield, Martín Yerovi

Executive Order Rescinds Tiktok and Wechat Prohibitions but Continues to Focus on Vulnerabilities in the ICTS Supply Chain

On June 9, the President issued an Executive Order on Protecting Americans’ Sensitive Data from Foreign Adversaries (EO 14034), rescinding three executive orders issued in the previous administration that prohibited transactions with the mobile applications TikTok and WeChat and eight other Chinese-developed and -controlled applications. At the same time, the EO makes clear that the current administration remains focused on protecting the information and communications technology and services (ICTS) supply chain against threats from foreign adversaries, defined to include China, as set forth in the May 2019 Executive Order 13873 (Securing the Information and Communications Technology and Services Supply Chain) and its implementing regulations. The EO also identifies criteria for the Department of Commerce to use in evaluating the risks of a connected software application.

Click here to continue reading the full version of this alert.

For more information: Caroline Brown, Kate Growley, Stephanie Crawford

Customs Rulings of the Week

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

Crowell & Moring Welcomes

Marcia C. Pulcherio is an associate in Crowell & Moring’s International Trade Group, with the firm’s Brussels and Washington D.C. offices. Marcia has worked as an international associate in the international trade and compliance practice of an Am Law 100 firm in Washington D.C. and at a major international trade firm in Sao Paulo, Brazil. She focuses on international trade law, policy and compliance, as well as international regulation. Marcia represents clients in trade defense cases before the DOC, ITC, and the European Commission, and in disputes before the WTO. She also gained regulator experience at the Brazilian Embassy in Washington, D.C. and at the Brazilian Mission before the WTO in Geneva.

Anand Sithian is a counsel in Crowell & Moring’s International Trade Group and a resident in the firm’s New York office. He joins Crowell from an Am Law 25 New York firm. Previously, Anand served as served as a Trial Attorney in the Asset Forfeiture and Money Laundering Section of the Criminal Division of the U.S. Department of Justice. While at DOJ, Anand served as a Special Assistant U.S. Attorney in both Washington, D.C., and in the Southern District of New York. At Crowell, Anand’s practice will focus on anti-money laundering, economic sanctions, cryptocurrency, and white-collar defense.

John Anwesen is an associate in Crowell & Moring’s International Trade Group and a resident in the firm's Washington, D.C. office. He joins the firm from another Washington firm where he practiced as an International Trade Associate. Previously, John has worked at the U.S. Department of Commerce where he served as an international trade analyst and attorney responsible for conducting all aspects of antidumping and countervailing duty proceedings, including investigations, administrative reviews, as well as scope and anti-circumvention inquiries involving imports of a diverse group of products and goods. At Crowell, John’s practice will focus on antidumping and countervailing duty cases before the U.S. Department of Commerce and the U.S. International Trade Commission under the Tariff Act of 1930 and litigation at the U.S. Court of International Trade.

Martín Yerovi is an international trade analyst in Crowell & Moring’s International Trade Group and a resident in the firm’s Washington, D.C. office. He joins Crowell after serving as an intern at Albright Stonebridge Group (ASG), an international strategic advisory firm based in Washington, D.C. Before his time with ASG, he completed an internship at the Embassy of Ecuador in the U.S. At Crowell, Martín will provide practice support on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR), U.S. Department of Commerce, International Trade Commission and U.S. Customs and Border Protection.

Crowell & Moring Speaks

Carlton Greene was featured in a June 24th Wall Street Journal article titled, “Deutsche Bank Overhauls Anti-Financial Crime Operations.”

Caroline Brown was featured in a June 15th Foreign Investment Watch article titled, “Summary Of New Executive Orders And Statements From Biden On FDI.”

Contacts

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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