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.
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.
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.