The Month in International Trade – November 2021

In this issue:

• Top Trade Developments
  • Latest U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures
  • Latest on Section 301 Product Exclusions
  • Court of International Trade Denies Expansion of Bifacial Solar Panel Tariffs
  • USTR Announces Replacement of Section 232 Tariffs on EU Imports with a Tariff-Rate Quota
  • Texas Court Dismisses DOJ’s FCPA and Money Laundering Claims Finding DOJ’s Agency Theory of Liability Unconstitutional
  • Treasury Agencies Issue Virtual Currency Sanctions Compliance Guidance and Ransomware Trends Statistics
  • DDTC Adds Ethiopia to List of Proscribed Countries and Updates Restrictions Applied to Eritrea
  • Customs Rulings of the Week
• Crowell & Moring Webinars
• Crowell & Moring Speaks

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.

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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, Ru Xiao-Graham, Sam Boone, Clayton Kaier

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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, Ru Xiao-Graham, Sam Boone, Clayton Kaier

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Court of International Trade Denies Expansion of Bifacial Solar Panel Tariffs

A cross-practice C&M team scored two major victories for Invenergy Renewables LLC in related cases challenging the Trump Administration’s attempts to re-impose tariffs on bifacial solar panels. This was the government’s third attempt to re-instate tariffs on bifacial solar panel imports and the history of these cases is long and tortured. As background, the U.S. Trade Representative (USTR) enacted the safeguard tariffs in January 2018 during the Trump administration to address a temporary surge in solar cell imports. Solar panel importers and domestic solar panel producers argued as to whether dual-sided solar panels should be excluded from the increased tariffs and several companies petitioned USTR to issue an exclusion for bifacial panels. After granting the bifacial panel exclusion in mid-2019, the USTR attempted to withdraw it only a few months later. The C&M team blocked that move by filing a complaint on behalf of their client Invenergy and quickly moving for a TRO and preliminary injunction. The court granted the TRO and then entered a Preliminary Injunction in December 2019, finding that USTR’s action was likely arbitrary and capricious. USTR tried to remedy those deficiencies through a new notice-and-comment process, culminating in a new rule again withdrawing the solar panel tariff exclusion in April 2020. The government then asked the court to lift its PI—but again Invenergy prevailed, convincing the court that USTR’s action remained arbitrary and capricious.

In October 2020, then-President Trump attempted to overcome the court’s decisions and issued a Proclamation withdrawing the bifacial solar panel exclusion. He used Section 204 of the Trade Act of 1974 to place safeguard tariffs on two-sided solar panels and increased the duty on them from 15% to 18% ad valorem. However, Section 204 of the Trade Act of 1974 sets forth specific conditions allowing the “reduction, modification or termination” of an existing safeguard, including that a majority of the domestic industry petition the president to take action.

The C&M team brought a new suit to challenge that executive action, and again prevailed. The CIT’s November 16 opinion agreed that, under Section 204 of the Trade Act, the President may not reimpose the safeguard tariff on solar panels. On November 16, the Court of International Trade granted summary judgment in favor of Invenergy and its co-plaintiffs in their challenge to Presidential Proclamation 10101, in which President Trump attempted to withdraw a tariff exclusion for bifacial solar panels critical to U.S. utility-grade solar developments. And on November 17, the court granted judgment to Invenergy and its co-plaintiffs in their challenge to the Trade Representative’s prior attempt to withdraw the solar panel exclusion. The court’s November 17 opinion held that USTR lacked statutory authority to take such action, and that USTR’s action was also arbitrary and capricious because USTR did not sufficiently explain its decision or respond to comments from Invenergy and others.

The C&M team included John Brew, Larry Eisenstat, Amanda Berman, Katie Clune, Frances Hadfield, Robert LaFrankie, Jacob Zambrzycki, Alex Rosen, Brian McGrath, April Marconi, Brad Hutter and Jena Talarico. The C&M team partnered with counsel for the Solar Energy Industries Association (SEIA) and other solar importers and developers in both cases, but took the lead in briefing and arguing the first case, and briefed and argued key parts of the second.

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USTR Announces Replacement of Section 232 Tariffs on EU Imports With a Tariff-Rate Quota

On October 31, 2021, the Office of the United States Trade Representative (USTR) announced that the United States would be replacing the existing 25% tariff on EU steel and 10% tariff on EU aluminum under Section 232 with a tariff-rate quota (TRQ). As such, eligible products that are within the quota will be able to enter free of any Section 232 duties. Products that enter the U.S. above the quota will continue to be subject to the 25% tariff on steel and 10% tariff on aluminum. Both TRQs for each product are set to take effect as of January 1, 2022.

In their announcement, USTR also noted that the U.S. will maintain its exclusion process, as implemented under Section 232, for both steel and aluminum. Excluded products will not count against the TRQ nor will Section 232 duties apply to these imports. For steel exclusions only, the U.S. will also be extending the application of exclusions granted and used in the U.S. for Fiscal Year 2021 for steel products imported from the EU and will not require additional reapplication for a period of two calendar years – i.e., until December 31, 2023. These exclusions will be for U.S. exclusion holders and to corresponding EU exporter(s). In their announcement, USTR did not include any language about additional benefits for aluminum exclusions which signifies that those exclusions will still require reapplication on an annual basis.

For steel imports from the EU, the annual import volume is set at 3.3 million metric tons (MMT) under 54 product categories. This amount will also be allocated on an EU member state basis and will be in line with historically based volumes from 2015-2017. Steel product imports must be “melted and poured” in the EU in accordance to U.S. requirements and rules to be eligible as well. Calculation of the TRQ will take place each year on a quarterly basis. Any unused TRQ volume from the first quarter of that specific year – and only up to 4% of the allocated quota for that quarter – will roll over to the third quarter of that year. Unused TRQ volumes between the second quarter and the fourth quarter as well as between the third quarter and first quarter of the next year, are subject to the same roll-overs. The TRQ will be allocated on a first-come, first-served basis for each of the 54 categories from each EU member state, and the U.S. will provide updated information regarding the use of the quarterly quota on a public website.

For aluminum imports from the EU, the annual import volume is set at 18 thousand metric tons (TMT) for unwrought aluminum under two product categories, and 366 TMT semi-finished (wrought) aluminum under 14 product categories. The amount will be allocated on an EU member state basis similar to the quota for steel; however, the volumes will be in line with 2018-2019 historical levels – with the exception of foil, where 2021 annualized data will be used. Importers of aluminum steel will need to provide a Certificate of Analysis for each aluminum product. The TRQ for aluminum will be administered on a semi-annual basis, with no more than 60% of the TRQ to be filled in the first half of a given year.

The announcement is available here.

For more information: Frances Hadfield, Sam Boone, Martin Yerovi

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Texas Court Dismisses DOJ’s FCPA and Money Laundering Claims Finding DOJ’s Agency Theory of Liability Unconstitutional

In an order filed on November 10, 2021, the District Court for the Southern District of Texas granted a motion to dismiss an indictment finding that it lacked jurisdiction over Foreign Corrupt Practices Act (“FCPA”) and money laundering claims brought against Swiss resident and citizen Daisy T. Rafoi-Bleuler. Moreover, the court concluded that the FCPA and money laundering claims were unconstitutionally vague as applied. See United States v. Rafoi-Bleuler, Case No. 4:17-CR-0514-7, Dkt. No. 255 (Nov. 10, 2021).

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

For more information: Thomas Hanusik, Warrington Parker, Nimrod Aviad

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Treasury Agencies Issue Virtual Currency Sanctions Compliance Guidance and Ransomware Trends Statistics

On October 15, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued its first-ever sanctions compliance guidance (the “OFAC Guidance” or “Guidance”) for the virtual currency industry. The Guidance represents a focused effort by OFAC to highlight sanctions risks present in the virtual currency industry, which has experienced tremendous growth in the past few years, and to suggest methods for ensuring compliance. The Guidance is a helpful compilation and distillation of OFAC’s guidance and resources relevant to virtual currency, as well as virtual currency-related enforcement actions and frequently asked questions, all designed to serve as a primer for those operating in the virtual currency sector who may be unfamiliar with OFAC and U.S. sanctions. OFAC suggests that many virtual currency businesses are launching products and services without making adequate provision for sanctions compliance, and the Guidance seems aimed at addressing this.

The Guidance is the latest in a series of OFAC actions focused on the virtual currency sector, including a series of enforcement actions against virtual currency companies, updated guidance on ransomware attacks and designation of a virtual currency exchange. Industry participants should be aware of this history and the new guidance, and prepare for enhanced scrutiny and enforcement.

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

For more information: Caroline Brown, Carlton Greene, Paul Rosen, Sarah Bartle, Anand Sithian, Nicole Succar

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DDTC Adds Ethiopia to List of Proscribed Countries and Updates Restrictions Applied to Eritrea

On November 1, 2021, the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) issued a final rule adding Ethiopia to the Proscribed Country List found in the International Traffic in Arms Regulations (ITAR) in § 126.1 and also updating the existing restrictions on Eritrea.

A policy of denial now applies to licenses (or other approvals) for exports of defense articles or defense services to or for the armed forces, police, intelligence, or other internal security forces of either Ethiopia or Eritrea. The details of this policy can be found in ITAR § 126.1(h) and (n).

This policy change was made in response to concerns of the ongoing crisis in northern Ethiopia along with other threats to Ethiopia’s sovereignty, national unity, and territorial integrity. People in northern Ethiopia continue to suffer human rights violations, abuses, and atrocities. But as this occurs, Ethiopian and Eritrean militaries are blocking needed humanitarian relief. The Secretary of State announced in May of 2021 restrictions on security assistance to Ethiopia and Eritrea. This final rule makes the ITAR consistent with this announcement.

The Federal Register notices are available here.

For more information: Jeff Snyder, Chandler Leonard, Rachel Schumacher

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Customs Rulings of the Week

• Classification of Absolut Vodka Sodas
• Classification of Decorative Led Lanterns
• Classification of Cappuccino and Latte Macchiato Cold Brew Beverages

For more information, contact: Frances Hadfield, Martín Yerovi

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Crowell & Moring Webinars

Supply Chain Webinar Series: Torts & Product Liability issues

Wednesday, January 12 at 1:00 pm EST (1 hour)

A failure to meet safety compliance and regulatory obligations can undo the herculean efforts to surmount supply chain challenges and get products into the US. Our Products Liability and Regulatory Compliance lawyers will discuss the impacts of current efforts by regulators to police product safety at the ports, the expectations of federal safety regulators at the ports and how to use compliance documentation to speed the process when products have been stopped for inspection. Our discussion will cover activities at CPSC, NHTSA, EPA and FDA. The panel will also discuss the challenge of counterfeit products and parts and how safety can be a lever to stop counterfeits. Given the increased costs of shipping, downstream recovery opportunities may help alleviate some of the monetary pressures and our panel will discuss these opportunities as well as the contract clauses that can allocate risks appropriately when things do go wrong.

Supply Chain Webinar Series: International Trade
Wednesday, January 26 at 1:00 pm EST (1 hour)

Supply chain disruptions have exacerbated strains and weaknesses in existing trade infrastructure, causing widespread ripple effects throughout the global economy.  From an international trade perspective, companies face real-time pressures to make business decisions that may have complex legal implications going forward.  Our International Trade Team will lead a discussion highlighting current risks companies are encountering, potential legal implications, and strategies to mitigate risks in real-time in this dynamic and changing landscape.

Contact: Marketing Events (MarketingEvents@crowell.com)

Register for Event

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Crowell & Moring Speaks

November 16, 2021 – Law360 quotes Environment & Natural Resources partner Amanda Berman in connection with the U.S. Court of International Trade striking down the Trump administration’s third attempt to reinstate emergency tariffs on bifacial solar panel imports (Solar Energy Industries Association et al. v. U.S. et al., case number 20-03941). According to Berman, the Court recognized the unlawful nature of President Trump’s re-imposition of tariffs on these solar panels, and that the government must stay within the bounds of the authority given to it by Congress when it acts to impose tariffs or otherwise. Crowell & Moring represented Invenergy Renewables in the case (“CIT Strikes Down Expansion of Solar Safeguard Tariffs”).