Trade Remedy/Enforcement

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 Congressional Research Service (CRS), a nonpartisan staff to congressional committees and Members of Congress, has released an overview report, International Trade and Finance: Overview and Issues for the 116th Congress, in which it offers a brief review of President Donald Trump’s first two years in office and policy issues that the new 116th Congress may address. The policy issues include: the impact of trade and trade agreements on the U.S. economy; the causes and consequences of the U.S. trade deficit; the implications of technological developments for U.S. trade policy; and the intersection of economics and national security.

The report acknowledges that the president has focused his trade policy on “reevaluating many U.S. international trade and economic policies and relationships.” The report also notes that members of Congress “exert significant influence over U.S. economic and trade policy and its implementation through their legislative, appropriations, and oversight roles” and that “[g]iven current debates, fundamental questions about the future direction of trade and international economic issues may be key areas of interest for the 116th Congress.” Some of the trade issues discussed in the report are:

  • Tariff Actions Undertaken by the Trump Administration – summarizing imposed and/or increased tariffs under: (1) Section 201 of the Trade Act of 1974 on U.S. imports of washing machines and solar products; (2) Section 232 of the Trade Expansion Act of 1962 on U.S. imports of steel and aluminum, and potentially autos, auto parts and uranium; and (3) Section 301 of the Trade Act of 1974 on U.S. imports from China; and retaliatory tariffs implemented by other countries.
  • U.S.-China Trade and Key Issues – summarizing China’s economic rise and increasing U.S. tensions over various economic and trade issues “stemming largely from China’s incomplete transition to an open-market economy,” including: (1) China’s industrial policies and Made in China 2025 initiative; (2) China’s policies on technology, innovation, and intellectual property and its economic espionage; and (3) China’s Belt and Road Initiative.
  • U.S. Bilateral and Regional Trade Agreements and Negotiations – summarizing a number of trade actions and negotiations the Trump administration has undertaken concerning free trade agreements, including: (1) the U.S.-Mexico-Canada Agreement (USMCA); (2) modifications to the U.S.-South Korea (KORUS) free trade agreement; (3) ongoing U.S.-European Union trade negotiations; (4) U.S.-Japan trade negotiations; and (5) the call for launching U.S.-United Kingdom free trade agreement negotiations.
  • The World Trade Organization – summarizing the state of affairs and growing challenges facing the World Trade Organization (WTO) and calls for reforms of its functions, including: (1) the lack of any modernization of its rules since 1995 despite numerous multilateral and plurilateral negotiations; (2) the entrenched differences in priorities among leading emerging market economies, developing countries and advanced economies; and (3) skepticism over the WTO’s dispute settlement system.

In addition to these high-profile trade matters, the CRS report also provides details on more general trade issues such as intellectual property rights, labor and environmental conditions in trade agreements, and select U.S. import policies. It concludes with an overview of foreign direct investment in the United States and a review of international financial institutions and markets relied upon to discuss and coordinate economic policies.

International trade matters, at times, dominated the 2018 political landscape. Those of us at Trump and Trade expect 2019 to be no different. While the CRS report offers a broad overview of the policy debates that remain, we recommend a quick review of it. The report itself concludes that these issues “provide the backdrop for a potential robust and complex debate in the 116th Congress over a range of trade and finance issues.”

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

On Friday, January 25, 2019, President Trump issued a new Executive Order expanding the current sanctions imposed on the government of Venezuela to target the country’s state-owned oil company Petróleos de Venezuela, S.A. (PdVSA) – its primary source of revenue – and to increase pressure on Venezuelan President Nicolas Maduro to step down. This followed the Trump administration’s announcement on January 23, 2019 to formally recognize Juan Guaidó as the interim president of Venezuela and declare Maduro to be illegitimate. In response to the order, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) on January 28, 2019 placed PdVSA on the Specially Designated Nationals (SDN) List and issued General Licenses that will continue for a specified period of time to authorize certain transactions and activities related to PdVSA and its subsidiaries.

Companies or individuals holding debt with certain entities directly or indirectly affiliated with PdVSA must ensure they are fully aware of these recent developments. Due to these modifications, existing contracts and open obligations should be reviewed to ensure they continue to be structured within the scope of these new General Licenses, and, given this heightened political situation, companies should be prepared for additional actions taken by the Trump administration in the form of additional sanctions or other targeted prohibitions until the Maduro regime is replaced. Continue Reading New Sanctions Imposed on Venezuela Include PdVSA; Eight New OFAC General Licenses Released

After much debate and despite continuing criticism, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) lifted sanctions previously imposed upon three Russian entities: En+ Group plc (En+), United Company Rusal plc (Rusal) and JSC EuroSibEnergo (ESE). Effective January 27, 2019, OFAC removed these entities from the Specially Designated Nationals (SDN) List. Continue Reading Companies Previously Controlled by Russian Oligarch Are Removed from OFAC SDN List

This month, two bills have already been introduced in the House of Representatives that show the division among Republican Party members over President Donald Trump’s authority to impose tariffs. On one side of the debate, Rep. Warren Davidson (R-Ohio) introduced the Global Trade Accountability Act of 2019, which seeks to restore Congress’s constitutional authority over trade and international commerce, including approval on tariffs, duties and quotas. In a brief statement, Davidson stated that the bill seeks to “support the President’s Constitutional authority to negotiate trade deals, and restore Congressional responsibility for reinforcing, improving, and approving trade policy.” The bill would require congressional approval for any “unilateral trade action” by the president – including any of the following actions concerning the importation of an article: (i) a prohibition on the importation of the article; (ii) the imposition of or an increase in a duty applicable to the article; (iii) the imposition or tightening of a tariff-rate quota applicable to the article; (iv) the imposition or tightening of a quantitative restriction on the importation of the article; (v) the suspension, withdrawal or prevention of the application of trade agreement concessions as to the article; or (vi) any other restriction on the importation of the article. Before such trade actions could be implemented, the president would be required to submit to Congress a report providing sufficient details on the proposed trade action, and a joint resolution would have to be approved. Davidson previously introduced the bill in the last session of Congress but the legislation did not advance. It is possible, however, that there may be a shifting of congressional direction on this matter given the ongoing trade dispute with China and recent statements from Sen. Chuck Grassley (R-Iowa) that he, as chairman of the Senate Finance Committee, intends to introduce legislation that would limit the president’s authority to impose tariffs. Continue Reading Competing Tariff Bills Introduced in Congress

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.”

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.