On August 12, 2020, the Office of the U.S. Trade Representative (USTR) released an updated list of goods from the European Union (EU) that will continue to be subject to retaliatory tariffs as part of the dispute settlement at the World Trade Organization (WTO) over Airbus subsidies. In June 2020, USTR sought public comment on a proposal to possibly modify the list of EU products subject to the tariffs and whether such products should be subject to additional duties. See Update of June 25, 2020. The announced changes yesterday were minimal. The USTR determined that the amount of products subject to WTO retaliatory tariffs will remain unchanged at $7.5 billion and the tariff rates will remain unchanged at 15% for aircraft and 25% for all other products.

The USTR is removing from the list certain cheeses from Greece and sweet biscuits from the United Kingdom and adding an equivalent amount of trade from France and Germany with tariffs on various fruit jams, pastes and purees. The changes will take effect on September 1, 2020. In a press statement, Ambassador Robert Lighthizer commented: “The EU and member states have not taken the actions necessary to come into compliance with WTO decisions … The United States, however, is committed to obtaining a long-term resolution to this dispute. Accordingly, the United States will begin a new process with the EU in an effort to reach an agreement that will remedy the conduct that harmed the U.S. aviation industry and workers and will ensure a level playing field for U.S. companies.”

For additional background on this longstanding dispute between the United States and the EU over alleged subsidies provided to Airbus and Boeing and the implementation of these tariffs, see our Updates of October 4, 2019 and December 9, 2019.

The Federal Trade Commission (FTC) has issued a Notice of Proposed Rulemaking (NPRM) seeking public comment on the “Made in USA” claim and other unqualified U.S.-origin claims on product labels. The FTC’s statutory authority allows it to pursue enforcement actions to prevent unfair and deceptive “Made in USA” and other U.S.-origin claims. According to the notice, the FTC held a public workshop and collected public comments in support of a review of unqualified labeling claims. The FTC noted that many participants at the workshop stated that a federal rule “could have a strong deterrent effect against unlawful [“Made in USA”] claims without imposing new burdens on law-abiding companies.”

This NPRM is intended to cover labels on products that make unqualified U.S.-origin claims. If implemented, it would prohibit marketers and advertisers from including unqualified claims on labels unless:

  1. Final assembly or processing of the product occurs in the United States,
  2. all significant processing that goes into the product occurs in the United States, and
  3. all or virtually all ingredients or components of the product are made and sourced in the United States.

The proposed draft definition of “Made in USA” would mean “any unqualified representation, express or implied, that a product or service, or a specified component thereof, is of U.S. origin, including, but not limited to, a representation that such product or service is ‘made,’ ‘manufactured,’ ‘built,’ ‘produced,’ ‘created,’ or ‘crafted’ in the United States or in America, or any other unqualified U.S.-origin claim.”

The NPRM also covers labels making unqualified “Made in USA” claims appearing in mail order catalogs or mail order advertising. In order to avoid confusion or perceived conflict with other country-of-origin labeling laws and regulations, the NPRM specifies that it does not supersede, alter, or affect any other federal or state statute or regulation relating to country-of-origin labels, except to the extent that a state country-of-origin statute, regulation, order, or interpretation is inconsistent with the NPRM.

Interested parties may file comments until September 14, 2020, by filing online via the Federal ePortal at www.regulations.gov and searching for Docket No. FTC-2020-0056-0001, or via hard copy to the Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex C), Washington, DC 20580, and noting “MUSA Rulemaking, Matter No. P074204” on the envelope and in the comments.

In response to President Donald Trump’s Executive Order on Hong Kong Normalization that suspended the application of preferential trade status for Hong Kong (see Update of July 16, 2020), U.S. Customs and Border Protection (CBP) issued a Federal Register notice on August 11, 2020, that changed the country of origin marking requirements for imported goods produced in Hong Kong. As of July 29, 2020, imported goods produced in Hong Kong must be marked to indicate that their origin is “China.”

Acknowledging commercial realities, CBP is allowing a 45-day transition period for implementation of the marking requirements in this notice. As a result, unless excepted from marking, goods produced in Hong Kong that are entered or withdrawn from warehouse for consumption into the United States must be marked with the country of origin “China” as of September 25, 2020.

On August 7, 2020, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 11 individuals for undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong. These actions were taken pursuant to Executive Order 13936, “The President’s Executive Order on Hong Kong Normalization” (see Update of July 16, 2020). In announcing the sanctions, Secretary of the Treasury Steven Mnuchin stated that these individuals “have implemented policies directly aimed at curbing freedom of expression and assembly, and democratic processes, and are subsequently responsible for the degradation of Hong Kong’s autonomy.” He added, “The United States stands with the people of Hong Kong and we will use our tools and authorities to target those undermining their autonomy.” The individuals sanctioned are:

  • Carrie Lam, Chief Executive, Hong Kong Special Administrative Region (HKSAR)
  • Chris Tang, Commissioner of Hong Kong Police Force (HKPF)
  • Stephen Lo, Former Commissioner of HKPF
  • John Lee Ka-chiu, HKSAR Secretary for Security
  • Teresa Cheng, HKSAR Secretary for Justice
  • Erick Tsang, HKSAR Secretary for Constitutional and Mainland Affairs
  • Xia Baolong, Director of the Hong Kong and Macao Affairs Office of the State Council
  • Zhang Xiaoming, Deputy Director of the Hong Kong and Macao Affairs Office of the State Council
  • Luo Huining, Director of the Hong Kong Liaison Office
  • Zheng Yanxiong, Director, Office for Safeguarding National Security in Hong Kong
  • Eric Chan, Secretary General, Committee for Safeguarding National Security of the HKSAR

As a result of these designations, all property and interests in property of the individuals named above, and of any entities that are owned, directly or indirectly, 50% or more by them individually or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC. Unless authorized by a general or specific license issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or that take place within the United States that involve any property or interests in property of designated persons. The prohibitions include the making or receiving any contribution of funds, goods, or services benefiting any blocked person.

China’s Foreign Ministry quickly retaliated by sanctioning 11 U.S. congressmen and several non-governmental officials (NGOs), including: Sens. Patrick J. Toomey (Pa.); Tom Cotton (Ark.); Josh Hawley (Mo.); Marco Rubio (Fla.); Ted Cruz (Tex.); Rep. Christopher H. Smith (N.J);  Carl Gershman, president of the National Endowment for Democracy; Derek Mitchell, president of the National Democratic Institute; Kenneth Roth, executive director of Human Rights Watch; Daniel Twining, president of the International Republican Institute; and, Michael Abramowitz, president of Freedom House.

On August 10, 2020, the U.S. International Trade Commission (USITC)  released its final report on miscellaneous tariff bill petitions it received under the 2016 American Manufacturing Competitiveness Act (AMCA).

As required by the AMCA, the USITC submitted the report to the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance for their use in developing a miscellaneous tariff bill (MTB) for Congressional consideration. The American Manufacturing Competitiveness Act: 2020 Final Report (USITC Publication No. 5097) (Final Report) provides recommendations on 3,442 petitions and categorizes each petition as either: (1) petitions that meet the requirements of the AMCA with or without modification (Category I, II, III, or IV petitions), (2) petitions that do not contain the information required by the AMCA or for which the USITC determined that the petitioner was not a likely beneficiary (Category V petitions), or (3) petitions that the USITC does not recommend for inclusion in a MTB (Category VI petitions). The largest product categories were chemicals, accounting for 1,839 petitions; machinery and equipment, accounting for 715 petitions; and textiles, apparel and footwear, accounting for 581 petitions. Of the 3,442 petitions, the USITC assigned 2,695 to Categories I through IV, 42 to Category V and 705 to Category VI.

In addition to finalizing the list of products, the USITC made certain determinations for each petition in this Final Report, including comments on: (1) whether the duty suspension or reduction can likely be administered by Custom and Border Protection (CBP); (2) whether the estimated revenue lost does not exceed $500,000 in a calendar year; and (3) whether the duty suspension or reduction is available to any person importing the article. Any approval of possible tariff relief and changes to the Harmonized Tariff Schedule (HTS) must now be considered and approved by Congress; however, it is unclear when either the Senate or House of Representatives will undertake consideration of the USITC report.  Once approved, any duty suspension or reduction would be for a period of three years.

For additional background on this MTB process, see Updates of October 1, 2019, and January 10, 2020.

As promised by Canadian Deputy Prime Minister Chrystia Freeland, Canada’s Department of Finance issued a notice of its intent to impose countermeasures to President Donald Trump’s reimposition of 10% Section 232 national security tariffs on imports of certain Canadian aluminum products. See Update of August 7, 2020. The products subject to countermeasures will be selected from those listed in Table 1 of the notice, which includes a wide variety of aluminum products. Canadian companies and persons have until September 6, 2020 to provide comments in support of or in opposition to any tariff on a particular product. Goods identified on any final list will be subject to a 10% Canadian surtax. The notice states that “these countermeasures will only apply to goods originating from the U.S., which shall be considered as those goods eligible to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (CUSMA Countries) Regulations.” These countermeasures will take effect by September 16, 2020, and will remain in place until the U.S. government eliminates its Section 232 tariffs against Canada.

The U.S. Department of Homeland Security’s Federal Emergency Management Agency (“FEMA”) has issued a Federal Register notice extending and modifying the temporary final rule (“Rule”) establishing export restrictions on certain types of personal protective equipment (“PPE”) products and respirators (“Covered Products”) used in the response to the COVID-19 pandemic.  (For more information on the April 7, 2020 Rule and its exemptions, please see our Updates dated April 7 and April 22.)  Effective August 10, 2020, the Rule now covers four categories of items — instead of six — and will remain in effect until December 31, 2020.

Per the notice, the list of Covered Products identified in the original Rule was modified to reflect current domestic needs, will be allocated for domestic use and may not be exported from the United States without explicit FEMA approval.  As of August 10, 2020, the Covered Products are:

  1. Surgical N95 filtering facepiece respirators, including devices that are disposable, half-face-piece, non-powered, air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates;
  2. PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials;
  3. PPE nitrile gloves, including those defined at 21 C.F.R. Section 880.6250 (exam gloves) and 878.4460 (surgical gloves) and such nitrile gloves intended for the same purposes; and
  4. Level 3 and 4 surgical gowns and surgical isolation gowns that meet all of the requirements in ANSI/AAMI PB70 and ASTM F2407-06 and are classified by surgical gown barrier performance based on AAMI PB70.

U.S. Customs and Border Protection (CBP) will continue to detain the shipments of Covered Products temporarily, during which time FEMA will determine whether to return for domestic use, to issue a rated order, or to allow the export of part or all of the shipment.  All of the exemptions and procedures applicable to the original rule previously identified by FEMA will remain in effect.

On August 6, 2020, President Donald Trump issued two executive orders which will ban certain transactions with China-based mobile applications TikTok and WeChat. Both orders note that additional steps must be taken to deal with the national emergency with respect to the information and communications technology and services supply chain declared in Executive Order 13873 (the “Telecom Supply Chain E.O.”; see Update of May 16, 2019). Specifically, the president determined that the “spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States.” This appears to be the administration’s first use of the authority declared in the Telecom Supply Chain E.O. The prohibitions will be effective September 20, 2020.

The Executive Order related to TikTok, a video-sharing mobile application owned by the Chinese company ByteDance Ltd. (a.k.a. Zìjié Tiàodòng), notes concerns about the gathering of personal and proprietary personal data, thus possibly allowing the Chinese Communist Party to “track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.” Further, the order notes the censoring of certain content, and the use of the mobile application for disinformation campaigns. It also highlights that the Department of Homeland Security, Transportation Security Administration and the United States Armed Forces have already banned the use of TikTok on federal government phones. The order will prohibit, to the extent permitted under applicable law, any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States, related to TikTok with ByteDance and any of its subsidiaries. (The E.O. does not prohibit transactions with ByteDance unrelated to TikTok.)

The Executive Order related to WeChat, a messaging, social media, and electronic payment application owned by the Chinese company Tencent Holdings Ltd. (a.k.a. Téngxùn Kònggǔ Yǒuxiàn Gōngsī), notes concerns about the gathering of personal and proprietary information of Chinese nationals visiting the United States, thus allowing the Chinese Communist Party of “keeping tabs on Chinese citizens who may be enjoying the benefits of a free society for the first time in their lives.” It also notes that censoring of content deemed politically sensitive and the possible use of the application for disinformation campaigns, and that the governments of Australia and India have begun to restrict or ban the use of WeChat. The order will prohibit, to the extent permitted under applicable law, any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States, related to WeChat with Tencent Holdings or and any of its subsidiaries. (The E.O. does not prohibit transactions with Tencent Holdings unrelated to WeChat.)

Neither executive order defines the term “transaction.” The Secretary of Commerce is to identify transactions subject to these prohibitions no later than September 20, 2020. It is likely that the scope will prevent TikTok and WeChat from being offered in Apple and Google’s app stores. It is also possible that users who have already downloaded the apps will be prevented from receiving software updates, which would eventually prevent the apps from being functional. There is no indication that, once identified, U.S. businesses will be allowed any “wind down” period in which to cease any defined transactions.

Meanwhile, Microsoft has indicated that it is moving quickly to arrange to acquire the TikTok service in United States, Canada, Australia, and New Zealand and to address the administration’s security concerns.

On August 6, 2020, the Office of the U.S. Trade Representative (USTR) issued a Federal Register notice announcing that for the nearly 1,000 exclusions it has granted to date for imported products from China appearing on Section 301 List 3 (Chinese goods with an annual trade value of approximately $200 billion), it will only grant extensions for 266 items.  These products will continue to be excluded from the Section 301 tariff until December 31, 2020.  For all other products that have previously been granted exclusions, those exclusions will expire as of midnight on August 7, 2020, and the products will again be subject to the additional Section 301 tariff.

USTR has granted extensions for 21 full Harmonized Tariff Schedule (HTS) subheadings:  (i) 0304.72.5000; (ii) 0304.83.1015; (iii) 0304.83.1020; (iv) 0304.83.5015; (v) 0304.83.5020; (vi) 0304.83.5090; (vii) 3923.21.0095; (viii) 3926.20.9050; (ix) 4015.19.1010; (x) 4819.50.4060; (xi) 5603.12.0090; (xii) 5603.14.9090; (xiii) 5603.92.0090; (xiv) 5603.93.0090; (xv) 6505.00.8015; (xvi) 8424.90.9080; (xvii) 8425.31.0100; (xviii) 8708.50.8500; (xix) 8712.00.1510; (xx) 8712.00.1520; and (xxi) 8712.00.1550.  The remaining 245 product exclusion extensions are specially-prepared product descriptions fully set forth in the annex to the Federal Register notice.  These product exclusion extensions cover a wide ranging list of products, including: certain frozen fruits and meats; certain chemicals and catalysts; certain plastics, rubbers and polymers; certain backpacks and duffel bags; certain household trays, bowls and plates; certain silk, and woven and non-woven fabrics; certain screen protectors, mirrors and other tempered glass products; certain outdoor grill products; various parts suitable for engines; certain hand pumps; certain fans, blowers and air compressors; certain printed circuit assemblies and circuit boards; certain electric motors and gears; certain static converters, inductors and other power supplies; certain electric fireplaces; certain digital video cameras and security systems; certain extension cords and electrical insulators and conductors; certain hitch receivers; numerous types and sizes of bicycles; certain lenses and microscopes; certain parts and accessories for meteorological instruments; certain upholstered chairs and seats as well as foldable stools; certain other chair frames and household furniture; certain shelving units and storage racks; certain baby furniture and bed rails; and certain fabric lamp shades.

USTR notes that the continuing product exclusions are available for any product satisfying the description in the annex, regardless of whether the importer filed an exclusion request. Each exclusion is governed by the scope of the 10-digit HTS subheading and product description in the annex, and is not governed by the product description set out in any particular request for exclusion.

 

On August 6, 2020, President Donald Trump issued a Presidential Proclamation reimposing the 10% ad valorem tariff on imports of non-alloyed unwrought aluminum products from Canada. Referencing his original Section 232 Proclamation No. 9704 of March 8, 2018 (see Update of March 8, 2018), President Trump stated that imports of this form of aluminum had “increased substantially” and were “principally responsible for the 27 percent increase in total aluminum imports from Canada during June 2019 through May 2020.” In separate press remarks, the president said that he “agreed to lift those tariffs in return for a promise from the Canadian government that its aluminum industry would not flood our country with exports and kill all our aluminum jobs, which is exactly what they did. Canadian aluminum producers have broken that commitment, and the U.S. Trade Representative, Robert Lighthizer, has advised me that this step to re-impose tariffs is absolutely necessary to defend our aluminum industry.”

As a result, imports of non-alloyed unwrought aluminum provided for in Harmonized Tariff Schedule (HTS) subheading 7601.10 will again, as of August 16, 2020, be subject to the 10% duty. The proclamation explains that tariff exclusions granted by the Department of Commerce for aluminum products from Canada that have not expired will remain valid and that previously granted exclusions that have expired may be renewed.

Canadian Deputy Prime Minister Chrystia Freeland, in a press statement, responded: “Canadian aluminum does not undermine U.S. national security. Canadian aluminum strengthens U.S. national security and has done so for decades through unparalleled cooperation between our two countries. Canada is a reliable supplier of aluminum for American value-added manufacturers. Aluminum trade between Canada and the U.S. has long been mutually beneficial economically for both countries, making the North American aluminum industry as a whole more competitive around the world.” Her statement concluded by indicating that Canada will “swiftly impose dollar-for-dollar countermeasures.”