On February 1, 2019, the American Institute of Steel Construction, LLC (AISC) filed a petition with the U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (Commission) seeking antidumping duties (ADD) and countervailing (CVD) duties on imports of fabricated structural steel (FSS) products from Canada, Mexico and the People’s Republic of China. FSS products are steel products that have been fabricated for assembly or installation into a structure and are intended to provide structural support and to ensure that a structure can bear certain loads or weight. According to the AISC, FSS imports from these countries have been dumped and subsidized, capturing U.S. market share directly from the domestic industry, which is represented by the AISC, causing material injury and threatening to cause further material injury to the domestic industry if ADD and CVD are not imposed.

FSS products covered in the petition include angles, columns, beams, plates, hollow structural shapes, channels and other steel products that have been fabricated into articles suitable for erection or assembly into a variety of structures (e.g., buildings, industrial and utility projects, parking decks, arenas and convention centers, medical facilities and ports, transportation and infrastructure facilities). Typical fabrication processes include cutting, drilling, welding, joining, bolting, bending, punching, pressure fitting, molding, adhesion and other finishing processes. The targeted FSS products are imported under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7308.90.9590, 7308.90.3000, 7308.90.6000, 7216.91.0010, 7216.91.0090, 7216.99.0010, 7216.99.0090, 7228.70.6000, 7301.10.0000, 7301.20.1000, 7301.20.5000, 7308.40.0000, 7308.90.9530 and 9406.90.00300.

The AISC is claiming injury from these alleged unfairly priced and subsidized imports, stating that “between 2015 and 2017, and throughout 2018,” FSS imports surged into the United States and captured market share at the direct expense of the domestic industry. These imports from Canada, China and Mexico allegedly entered the U.S. market in such large and increasing quantities by offering prices well below those of domestically produced FSS, forcing domestic producers to lower prices and leaving them in a vulnerable position. The AISC alleges these FSS imports surged into the U.S. market, increasing by more than 20 percent despite an increase in apparent domestic consumption of only 7.9 percent. As a result, the AISC argues in its petition that these FSS imports increased their market share, growing from 18.5 percent in 2015 to 20.4 percent in 2017. The petition also alleges substantial government subsidies, including provision of major inputs for less than adequate remuneration, tax reductions and exemptions, preferential loans, grants, preferential tax rates and export financing.

The petition lists a large number of foreign producers and exporters that shipped FSS products to the United States at allegedly dumped and subsidized prices from these three countries and the U.S. importers of those products.

Commerce will determine by March 1 whether to formally initiate the investigations and, if it does, the Commission will decide within 25 days after that whether there is a reasonable indication of existing material injury or threat of material injury to the FSS domestic industry that will require continuation of the investigation.

Thompson Hine is monitoring this matter closely. For additional information or to obtain a copy of the petition, please contact us.

In his second State of the Union address to Congress, President Donald Trump noted that he campaigned on several core promises, including “to defend American jobs and demand fair trade for American workers.” He argued that his administration has “moved with urgency and historic speed to confront problems neglected by leaders of both parties over many decades” and indicated that “one priority is paramount – reversing decades of calamitous trade policies.”

His prepared speech included comments on the ongoing trade dispute with China and the Section 301 tariffs imposed on $250 billion worth of imported Chinese products. He noted that his administration continues to work on a new trade deal with China, but that any final agreement “must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.” On the other major trade issue of 2018, the president called NAFTA an “historic trade blunder” and “catastrophe” that has now been addressed by the new United States-Mexico-Canada Agreement (USMCA). Trump called on Congress to pass the agreement in order to “bring … back our manufacturing jobs, [expand] American agriculture, [protect] intellectual property, and ensur[e] that more cars are proudly stamped with four beautiful words: made in the USA.”

In his only other significant remarks on trade, the president asked Congress to pass the United State Reciprocal Trade Act, arguing that the United States should be able to issue “the exact same tariff on the same product that they sell to us” if another country places an unfair tariff on a U.S. product. See also Trump and Trade Update of January 25 for more details on this act and other recently introduced trade- and tariff-related legislation.

Concerning economic sanctions and relations with certain “rogue” countries, the president announced that he will meet again with Kim Jong-un, Supreme Leader of North Korea, on February 26-27, 2019, in Vietnam, acknowledging that “much work remains to be done.” Trump highlighted his administration’s recent decision to officially recognized the legitimate government of Venezuela and its new interim president, Juan Guaidó. President Trump noted that he has “acted decisively to confront the world’s leading state sponsor of terror: the radical regime in Iran” and “put in place the toughest sanctions ever imposed on a country” after withdrawing from the “disastrous Iran nuclear deal.”

Shortly after the president’s address, the White House released a series of fact sheets on the various topics covered in his message, including “President Donald J. Trump Has Forged New Trade Agreements to Revitalize American Industry and Agriculture.”

The U.S. Trade Representative (USTR) is required by law to report annually to Congress on compliance by the People’s Republic of China (China) and the Russian Federation (Russia) with commitments made in connection with their accession to the World Trade Organization (WTO), including both multilateral commitments and any bilateral commitments made to the United States. In releasing the reports on February 5, 2019, the USTR stated, “China and Russia present unique and serious challenges for members of the WTO and the multilateral trading system, largely because of their failure to embrace the pursuit of open, market-oriented policies.” China became a member of the WTO in 2001 – see 2018 China WTO Compliance Report; Russia joined the WTO in 2012 – see 2018 Russia WTO Compliance Report.

China Report – In Part 1 of the report that provides an assessment of China’s WTO membership, the USTR states that China’s compliance with WTO rules is “poor” and highlights the country’s “continued embrace of a state-led, mercantilist approach to the economy and trade, despite WTO members’ expectations – and China’s own representations – that China would transform its economy and pursue the open, market-oriented policies endorsed by the WTO.” The report notes China’s failure to adhere to multiple bilateral and multilateral commitments, including commitments to refrain from forcible technology transfers; open its electronic payment services market; and review applications of agricultural biotechnology products in a timely and science-based manner. The report also notes China’s continuing use of export and import substitution subsidies in sectors as diverse as automobiles, textiles, advanced materials, medical products and agriculture, despite explicit prohibitions in the WTO Agreement. It highlights that China repeatedly deploys illegal export restraints, such as export quotas, export licensing, minimum export prices, export duties and other restrictions, to “provide substantial cost advantages to a wide range of downstream producers in China at the expense of foreign producers, while creating pressure on foreign producers to move their operations, technologies and jobs to China.” In the report, the USTR finds that “[a]ny review of China’s trade regime also shows that China’s regulatory system is so opaque that it is often difficult for U.S. companies – or even the U.S. government – to fully understand China’s legal requirements in a particular area of the economy. This problem is exacerbated by China’s extremely poor record of adhering to its transparency obligations as a WTO member.” Part 2 of the report provides a detailed analysis of China’s trade regime from a WTO perspective, including identifying and explaining China’s policies and practices that disadvantage or harm U.S. companies.

Russia Report – This report states that “the United States and others welcomed Russia into the WTO’s rules-based system with the hope of expanding the benefits of open and freely competitive markets. The reality has been disappointing.” It notes that U.S. trade with Russia has fluctuated since Russia’s WTO admission in 2012, and criticizes the continued promulgation of Russia’s protectionist measures and disregard of general WTO principles. While the report indicates that Russia has implemented its scheduled tariff reductions and lifted its transit ban on poultry products, importing into the country remains “a difficult task.” Non-tariff trade barriers remain an issue of concern, and Russia continues to have “a less than transparent customs legal regime” and other “arbitrary behind-the-border measures and other discriminatory practices to exclude U.S. exports.” While Russia strengthened its intellectual property rights (IPR) regime as part of its WTO accession, the report indicates that “reliable and effective implementation of those rules has stalled.” Overall, the USTR concludes that “[d]espite Russia’s continued reliance on inward-looking, protectionist economic policies, the United States will continue to press Russia to comply with its WTO commitments and pursue market-based principles. But, at the end of the day, Russia must decide its future and take responsibility for its actions and the impact of those actions on its citizens.”

With the 35-day partial federal government shutdown ending on January 26, 2019, the U.S. government’s trade-oriented agencies have reopened and are beginning to work through massive backlogs of work as personnel resume full-time operations. What follows is a listing of the current operational status of many of these agencies:

U.S. Customs and Border Protection (CBP)

While CBP staffed ports “as normal” during the shutdown to ensure that the “flow of trade {is} as close to normal as possible,” other functions were curtailed. Due to the lapse in federal funding, however, the CBP website and certain databases were not actively managed. While no formal announcement has been made by CBP, these resources are once again fully operational, including the Customs Rulings Online Search System (CROSS) and the AD/CVD search database.

U.S. Department of Commerce – Bureau of Industry and Security (BIS)

No official statement has been issued by BIS officials, but the Department of Commerce is once again fully operational. While export enforcement continued during the shutdown, other functions of BIS were severely curtailed, including the filing of export license applications. SNAP-R (BIS’s electronic filing system) is back up and accepting licensing applications; however, it is expected that the review-and-approval process for applications will be delayed due to the expected high volume of filings BIS expects to receive.

U.S. Department of Commerce – International Trade Administration (ITA)

ITA is once again fully operational and has issued a memorandum stating that “any delay and confusion caused by the closure of the Federal Government will best be minimized by uniformly tolling all Enforcement and Compliance deadlines for the effective duration of the recent closure (i.e., 40 days), with the exception of requests for administrative reviews of suspension agreements and antidumping duty (AD) and countervailing duty (CVD) orders.” ITA has indicated that this determination applies to every proceeding, with the exception of court-ordered redeterminations. For AD and CVD orders and suspension agreements with December and January anniversary months, all requests for administrative reviews are now due by February 28, 2019.

U.S. Department of State – Directorate of Defense Trade Controls (DDTC)

DDTC has posted a notice on its website stating that it “has returned to full operational status with all electronic application systems placed in normal operational mode and the 3pm daily pick-up and drop-off service restored.” In resuming full operations, the agency notes that “Priority will be placed on issuance of licenses in the system at the time of implementation of lapse of funding operations on December 22, 2018. New licenses will be accepted; however, industry is advised of the likelihood of longer than normal processing times due to the high volume of licenses DDTC expects to receive.”

U.S. Department of the Treasury – Office of Foreign Assets Control (OFAC)

As previously reported, Treasury continued to have critical staff reporting to work to maintain core operations, even though OFAC’s operations were significantly curtailed. OFAC is again fully functional, and its sanctions web pages and licensing portal are operating.

U.S. International Trade Commission (ITC)

The ITC has publicly stated that all investigations that were active and ongoing when the shutdown began will be tolled by 35 days; a formal notice soon to be published in the Federal Register will provide more detailed information. The ITC website notes that “specific schedules for each investigative proceeding, including those pending before an Administrative Law Judge, will be revised and new schedules posted. We hope in a week or more for revised schedules to be finalized.” The ITC website is once again fully operational, and EDIS (the ITC’s electronic filing system) was live and accepting filings as of January 30. The HTS Search Tool and Dataweb are once again fully operating.

Office of the U.S. Trade Representative (USTR)

USTR has announced that it has returned to “full operating status.” Bilateral trade negotiations continued during the shutdown, particularly those between the United States and China, which face a March 1 deadline before U.S. retaliatory tariffs increase on certain imports of certain Chinese products on March 2 from 10 percent to 25 percent; however, no notice has been provided regarding how the lengthy shutdown will affect the processing of Section 301 product exclusion requests.

The U.S. Department of Justice (DOJ) unsealed two separate indictments on Monday, January 28, 2019, charging Chinese telecommunications giant Huawei with 23 counts of criminal activity. In the Eastern District of New York (EDNY), a 13-count indictment was released charging four defendants affiliated with Huawei. In the indictment, Huawei Technologies Co., Ltd., Huawei Device USA Inc., Skycom Tech Co. Ltd. (Skycom) and Huawei’s Chief Financial Officer Wanzhou Meng were charged with a variety of crimes, including bank fraud, conspiracy to commit bank fraud, wire fraud and violations of the International Emergency Economic Powers Act (IEEPA), which serves as the statutory authority for the Iranian Transactions Sanctions Regulations (ITSR). In the Western District of Washington, the second unsealed indictment charges Huawei Device Co., Ltd. and Huawei Device USA, Inc. with 10 counts of theft of trade secrets conspiracy, attempted theft of trade secrets, wire fraud and obstruction of justice where Huawei employees were allegedly encouraged to steal technology from T-Mobile USA, Inc., a large U.S. telecommunications company. Continue Reading Chinese Telecom Giant Huawei Charged with Substantive Sanctions Violations; 23 Total Criminal Charges Overall

The White House has released a fact sheet listing the “historic results” of President Donald Trump’s first two years in office. For international trade, these results are listed:

”NEGOTIATING BETTER DEALS FOR THE AMERICAN PEOPLE: President Trump is negotiating fair and balanced trade deals that protect American industries and workers.

  • President Trump negotiated a new trade agreement between the United States, Canada and Mexico to replace the disastrous and outdated North American Free Trade Agreement.
    • Once enacted by Congress, the United States-Mexico-Canada Agreement (USMCA) will better serve the interests of American workers and businesses.
    • USMCA will incentivize billions of dollars in auto and auto parts production in the United States and create a freer and fairer market for American agriculture.
    • USMCA also includes the strongest-ever provisions on labor, environmental, digital, and intellectual property protections to reflect the realities of the 21st century economy.
  • The President renegotiated the United States-Korea Free Trade Agreement to preserve and grow jobs in the American auto industry and increase American exports.
  • The United States and Japan are set to begin negotiations on a United States-Japan Trade Agreement.
  • President Trump is establishing a new trade relationship with the European Union (EU), working toward the elimination of tariff and non-tariff barriers to transatlantic trade.
  • President Trump has established a Trade and Investment Working Group to lay the groundwork for post-Brexit trade with the United Kingdom (UK) and has notified Congress of his intent to negotiate a free trade agreement with the UK.
  • Under President Trump, the United States will no longer accept bad trade deals and unfair trade practices that harm American workers and industries.
    • One of the President’s first actions after taking office was withdrawing the United States from the terrible Trans-Pacific Partnership, which incentivized outsourcing.
    • In 2017, the Administration oversaw 82 antidumping and countervailing duty investigations.
  • President Trump is holding China accountable for its unfair trade practices, such as the theft of intellectual property, by imposing tariffs on $250 billion in Chinese goods.
    • Following President Trump’s successful meeting with President Xi in Buenos Aires, both agreed to conduct negotiations over 90 days to address the United States concerns.
  • American steel and aluminum jobs are coming back following President Trump’s tariffs to protect domestic industries that are vital to national security.
  • President Trump imposed tariffs to protect American-made washing machines and solar products that were hurt by import surges.
  • President Trump has expanded market access for American agricultural producers.
    • Argentina has opened to American pork and beef, Brazil to American beef, Japan to lamb and Idaho chipping potatoes, South Korea to American poultry, and more.
    • The Administration authorized $12 billion to aid farmers affected by unfair retaliatory tariffs.”

International trade and international trade disputes were a predominant focus of President Trump and his trade officials throughout 2018. Thompson Hine’s Trump and Trade team has prepared a slide presentation to provide our readers with a broad overview of the most significant trade actions taken by the Trump administration last year. From the renegotiation of the North America Free Trade Agreement (NAFTA), which is now the U.S.-Mexico-Canada Agreement (USMCA), to the many ongoing trade actions involving imports of steel, aluminum and products from China, it was a busy year. This overview concisely presents details and the current status of the president’s primary trade activities.

The presentation includes information on the current status of President Trump’s major trade actions, including NAFTA/USMCA negotiations, the U.S.-Korea Free Trade Agreement, and other bilateral trade negotiations with Japan, the European Union and the United Kingdom. It also provides details on major trade and tariff actions occurring in 2018, such as the Section 232 steel/aluminum tariffs, the Section 232 automobile and automobile parts investigation, and the Section 301 China-related tariffs.

We invite you to stay abreast of continuing developments in 2019 via our blog, TrumpandTrade.com. To receive an email notification whenever a new post is published, please subscribe to the blog.

Happy new year!

Following a dinner meeting between the two leaders at the G-20 summit in early December, President Donald Trump announced that he and Chinese President Xi Jinping agreed to begin and complete negotiations on certain trade issues between the countries within 90 days. As part of that process, Trump agreed to postpone for 90 days in the ongoing Section 301 trade action involving China the import tariff increase on the third tranche of Chinese products from 10 percent to 25 percent scheduled for January 1, 2019 (see Trump and Trade Update of December 3, 2018).

The announcement immediately triggered questions regarding when the 90-day postponement would begin – from the day of the president’s announcement or from the original January 1, 2019 deadline. Last Friday, the Office of the U.S. Trade Representative (USTR) confirmed in a Notice of Modification of Action that the 90-day period will end March 1, 2019. It announced that the rate of additional duties on the third tranche of Chinese products will increase to 25 percent as of March 2, 2019 at 12:01 a.m. (EST) if China and the United States do not successfully negotiate an outcome to address the unfair trade acts, policies and practices covered in the Section 301 investigation. In brief remarks to the press, USTR Robert Lighthizer stated that this was a “hard deadline.”

The U.S. International Trade Commission (USITC) determined December 7, 2018, by a 5-0 unanimous vote of its commissioners that U.S. industry is materially injured by reason of imports of common alloy aluminum sheet from China. This finding follows the determination of the U.S. Department of Commerce’s International Trade Administration (ITA) in early November that such imports are subsidized and sold in the United States at less than fair value. (See Trump and Trade Update of November 9, 2018.) These are the first trade remedy cases that the Trump administration has “self-initiated,” starting a process that usually begins with a petition from the domestic industry. It’s been more than 25 years since the last self-initiated trade remedy case.

As a result of the USITC’s final affirmative injury determination, the ITA will now issue antidumping and countervailing duty orders on imports of common alloy aluminum sheet from China. The USITC, however, made a negative finding concerning critical circumstances as to imports of this product from China. As a result, imports of common alloy aluminum sheet from China will not be subject to retroactive antidumping or countervailing duties.

The USITC’s public report, Common Alloy Aluminum Sheet from China (Inv. Nos. 701-TA-591 and 731-TA-1399 (Final), USITC Publication 4861, December 2018), will contain the views of the USITC and information developed during the investigations. The report will be available by January 11, 2019; when available, it may be accessed on the USITC’s Official Publication Log.

At a dinner meeting on December 1, 2018, at the G-20 summit in Buenos Aires, U.S. President Donald Trump and Chinese President Xi Jinping agreed to begin negotiations on changes regarding forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both agreed to seek completion of such discussions over the next 90 days. As part of the deal, Trump agreed to postpone the import tariff increase on the third tranche of Chinese products from 10 percent to 25 percent scheduled for January 1, 2019. Xi agreed to purchase a not yet agreed upon, but “very substantial,” amount of agricultural, energy, industrial and other products from the United States to reduce the trade imbalance between the United States and China. If the talks do not result in a deal, the Trump administration will implement the 25 percent tariff on the third tranche of Chinese products.

In a brief press statement, Trump stated: “This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honor to be working with President Xi.”