Trade Remedy/Enforcement

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.”

U.S. Customs and Border Protection (CBP) issued a significant ruling in September that distinguished between North American Free Trade Agreement (NAFTA) country-of-origin marking rules and the country-of-origin rules applying to products subject to Section 301 tariffs and trade remedy duties. In its ruling, CBP determined that Chinese-origin components imported into Mexico for assembly into an electric motor satisfied the requirements for marking the assembled product as a product of Mexico in accordance with the NAFTA Marking Rules; however, it ruled that the Chinese-origin components were not “substantially transformed” in Mexico and that the assembled final product remained a product of China subject to the U.S. government’s Section 301 retaliatory tariffs on imports of Chinese electric motors and to any potential trade remedy duty. CBP’s determination requires importers to understand thoroughly their supply chains, including the manufacturing processes of their suppliers and the origin of components used in those manufacturing processes.

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The United States has announced additional financial sanctions on three individuals and nine entities supporting Russia’s attempt to integrate the Crimea region of Ukraine through private investment and privatization projects or engaging in serious human rights abuses in furtherance of Russia’s occupation or control over parts of Ukraine. Under Secretary of the Treasury for Terrorism and Financial Intelligence Sigal Mandelker stated, “The United States is leveraging new authorities to target Russian actors for serious human rights abuses in parts of Ukraine that the United States government has determined are forcibly occupied or otherwise controlled by the Russian government, and other reprehensible acts in furtherance of the Kremlin’s malign agenda.”

The sanctioned individuals are Andriy Volodymyrovych Sushko, Aleksandr Basov and Vladimir Nikolaevich Zaritsky. The sanctioned entities are the Ministry of State Security of the so-called Luhansk People’s Republic, Mriya Resort and Spa, Limited Liability Company Garant-SV, Limited Liability Company Infrastructure Projects Management Company, Joint Stock Company Sanatorium AY-Petri, Joint Stock Company Dyulber, Joint Stock Company Sanatorium Miskhor, KRIMTETS, AO, and Limited Liability Company Southern Project.

As a result of these sanctions, as of November 8, 2018, all of these individuals and entities have been placed on the Office of Foreign Assets Control’s Specially Designated Nationals (SDN) List, their property and interests in property that are subject to U.S. jurisdiction have been blocked, and U.S. individuals and entities are generally prohibited from engaging in transactions with them.

On November 7, 2018, the Department of Commerce’s International Trade Administration (ITA) issued an affirmative final determination in the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of common alloy aluminum sheet from the People’s Republic of China (China). These investigations were self-initiated by the Trump administration last year (see Trump and Trade Updates dated April 18, 2018 and November 29, 2017), and were the first self-initiated investigations by the ITA in nearly 30 years.

In the AD investigation, ITA assigned a dumping rate of 49.85 percent for certain mandatory and otherwise eligible Chinese companies, while assigning a China-wide rate of 59.72 percent on other companies. In the CVD investigation, the ITA calculated a subsidy rate of between 46.48 percent and 55.02 percent for certain mandatory Chinese companies, while determining a rate of 116.49 percent for other Chinese companies that were specifically subject to the investigation. The China-wide subsidy rate is 50.75 percent. (See the AD case decision memorandum and CVD case decision memorandum.)

The ITA Fact Sheet notes that merchandise covered by these investigations is common alloy aluminum sheet, which is a flat-rolled aluminum product having a thickness of 6.3 mm or less, but greater than 0.2 mm, in coils or cut to length, regardless of width. Common alloy aluminum sheet within the scope of this investigation includes both not clad aluminum sheet, as well as multi-alloy, clad aluminum sheet. With respect to not clad aluminum sheet, common alloy sheet is manufactured from a 1XXX-, 3XXX-, or 5XXX-series alloy as designated by the Aluminum Association. With respect to multi-alloy, clad aluminum sheet, common alloy sheet is produced from a 3XXX-series core, to which cladding layers are applied to either one or both sides of the core. Subject merchandise includes common alloy sheet that has been further processed in a third country, including but not limited to annealing, tempering, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the common alloy sheet. Common alloy sheet is currently classifiable under HTSUS subheadings 7606.11.3060, 7606.11.6000, 7606.12.3090, 7606.12.6000, 7606.91.3090, 7606.91.6080, 7606.92.3090, and 7606.92.6080. Further, merchandise that falls within the scope of these investigations may also be entered into the United States under HTSUS subheadings 7606.11.3030, 7606.12.3030, 7606.91.3060, 7606.91.6040, 7606.92.3060, 7606.92.6040, 7607.11.9090. Excluded from the scope of these investigations is aluminum can stock, which is suitable for use in the manufacture of aluminum beverage cans, lids of such cans, or tabs used to open such cans.

The U.S. International Trade Commission (ITC) is scheduled to make its final determinations regarding injury on December 20, 2018. If the ITC makes affirmative final determinations that imports of common alloy aluminum sheet from China materially injure, or threaten material injury to, the domestic industry, the ITA will issue AD and CVD orders. If, however, the ITC makes negative final injury determinations, the investigations will be terminated and no orders will be issued.

In early August 2018, after it was determined that the Russian government was involved in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal with the use of a Novichok nerve agent, the U.S. Department of State (State Department) ruled under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 that the Russian government had used chemical or biological weapons in violation of international law. In an August 27, 2018 Federal Register notice, the U.S. government announced its sanctions in response, which became effective that date:

  • Foreign Assistance: Termination of assistance to Russia under the Foreign Assistance Act of 1961, except for urgent humanitarian assistance and food or other agricultural commodities or products.
  • Termination of Arms Sales: Termination of (a) sales to Russia under the Arms Export Control Act of any defense articles, defense services or design and construction services; and (b) licenses for the export to Russia of any item on the United States Munitions List.
  • Termination of Arms Sales Financing: Termination of all foreign military financing for Russia under the Arms Export Control Act.
  • Denial of U.S. Government Credit or Other Financial Assistance: Denial to Russia of any credit, credit guarantees, or other financial assistance by any department, agency or instrumentality of the U.S. government, including the Export-Import Bank of the United States.
  • Exports of National Security-Sensitive Goods and Technology: Prohibition on the export to Russia of any goods or technology on that part of the control list established under Section 2404(c)(1) of the Appendix to Title 50.

Continue Reading Department of State Imposes Additional Sanctions on Russia

As reported by Law360 this week, a California federal judge struck down a food additive exporter’s attempt to throw out claims saying it had smuggled glycine into the United States from China without paying more than $11 million in required duties, calling the exporter’s use of the Fifth Amendment “both a sword and shield.”

View the article: Glycine Exporter Can’t Dodge $11M Smuggling Scheme Claim

In connection with President Donald Trump’s May 8, 2018 decision to cease U.S. participation in the Joint Comprehensive Plan of Action (JCPOA) and to re-impose all sanctions lifted or waived in connection with the JCPOA, the president has issued a new Iran-related Executive Order, “Reimposing Certain Sanctions With Respect to Iran.” This completes the first of two wind-down periods for the re-imposition of certain Iranian sanctions. The terms in the Executive Order are effective at 12:01 a.m. Eastern Daylight Time (EDT) on August 7, 2018. In addition, certain wind-down general licenses that allowed limited continued actions involving Iran will expire at 11:59 p.m. EDT on August 6, 2018. Continue Reading U.S. Treasury Re-Imposes Certain JCPOA-Related Sanctions on Iran

On July 13, 2018, the Department of Commerce’s Bureau of Industry and Security issued an order terminating the April 15, 2018 Denial Order against Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd. (collectively, ZTE). The order confirms that ZTE paid the $1 billion penalty and complied with the requirement of depositing $400 million in a U.S. bank escrow account. This $1.4 billion amount was in addition to the $892 million in penalties ZTE paid under its earlier settlement agreement for U.S. export law violations that occurred when it supplied telecommunications equipment to North Korea and Iran.

In a brief statement, Commerce Secretary Wilbur Ross stated, “While we lifted the ban on ZTE, the Department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations … Three interlocking elements – a suspended denial order, the $400 million in escrow, and a compliance team selected by and answerable to the Department – will allow the Department to protect U.S. national security.”

As reported in a Trump and Trade Update dated June 8, 2018, the Department of Commerce reached a superseding settlement agreement with Zhongxing Telecommunications Equipment Corporation of Shenzhen, China (ZTE Corporation) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (ZTE Kangxun) (collectively, ZTE) to remove the Department of Commerce’s Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement. BIS has now published the superseding settlement agreement. Continue Reading ZTE Corporation Moves Closer to Removal of Denial Order