BIS Expands Export Restrictions Targeting China’s Largest Chipmaker

Co-Authored by Sharath Patil

Last week, the U.S. Department of Commerce’s Bureau of Industry & Security (“BIS”) informed some U.S. semiconductor manufacturers via a confidential letter that they would require export licenses before exporting certain products to China’s largest semiconductor manufacturer, Semiconductor Manufacturing International Corporation (“SMIC”). Although the letter is not available for public view, a September 28, 2020 Wall Street Journal article that broke the story said that the Commerce Department was concerned about high risks of diversion to a military end use. This additional export license requirement is part of a broader pattern of increased export restrictions, particularly to China.

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LIST 3 Exclusion Updates

On June 24, 2019, the Office of the United States Trade Representative (USTR) provided the public with an exclusion process for items included subjected to Section 301 Tariffs. Specifically, the exclusions related to products included on List 3, which went into effect on September 24, 2018.

Originally, List 3 imposed 10 percent ad valorem duties on 5,757 full and partial subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) and had an annual trade value of $200 Billion. Months later, in May 2019, the 10 percent ad valorem duties were increased to 25 percent. […]

List 4 Exclusion Update

On  June 26, July 17, and August 11, 2020, the Office of the United States Trade Representative (USTR) requested the public to submit comments regarding potential product exclusion extensions for items subject to Section 301 Tariffs. This comment period specifically applied to products that were included on List 4.

When the list was announced on August 20, 2019, it imposed a 10 percent ad valorem on 3,805 full and partial subheadings of the Harmonized Tariff Schedule of the United States (HTSUS), with an annual trade value of approximately $300 billion. Then, on August 30, 2019, USTR increased the rate of the additional duty announced in the August 20 notice from 10 to 15 percent. Finally, on January 22, 2020, USTR determined to reduce the rate from 15 to 7.5 percent. […]

Diaz Trade Law Now Filing List 4A Complaints – Join Section 301 Refund Lawsuit Now to Demand Refunds

301 Lawsuit Background

In mid-September, a coalition of importers filed a Court challenge to the USTR’s imposition of Section 301 duties on certain imports from China under Lists 3 and 4.  These duties were imposed as part of a process purportedly intended to address intellectual property abuses by China.  Specifically, this coalition has claimed that these duties were imposed contrary to law and ignored the statutory deadlines in Section 301.  Further, the coalition has argued that these duties were not imposed in response to the intellectual property violations alleged in the initiation notice, but rather were filed in response to the retaliatory tariffs enacted by China.  Accordingly, the coalition argues, such tariffs were void from the initial imposition.

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Maritime Industry Rocked by Cyber Attacks

Co-Authored by Sharath Patil

The maritime industry has been rocked by a string of cyber-attacks in recent weeks. Two of the most severe incidents involved the United Nation’s shipping agency, the International Maritime Organization (“IMO”), and the French shipping company CMA GCM S.A. (“CMA GCM”). These attacks remind the shipping industry about the dangers of such attacks and the importance of cybersecurity compliance. From a trade and customs perspective, such incidents trigger post incident analysis and other measures as part of the U.S. Customs & Border Protection’s (“CBP”) Customs Trade Partnership Against Terrorism Minimum Security Criteria. We will discuss two of the most severe cyber-attack incidents in recent weeks below and then discuss the trade and customs implications of such attacks.

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The U.S.-Brazil Trade Agreement is Imminent

Co-Authored by Sharath Patil

On October 5, 2020, Brazil’s Assistant Deputy Minister for Foreign Trade and International Affairs, Yana Dumaresq, stated during an Atlantic Council online panel discussion that a U.S.-Brazil trade agreement that covers trade facilitation, good regulatory practices, and anti-corruption is in legal scrub and the text should be finalized by mid-October. “We hope to have them signed this month,” Dumaresq said. The U.S. Commerce Department’s lead negotiator on this agreement, Joseph Semsar, said that “this is a unique opportunity to get things done that seemed unattainable.” These latest developments are a result of months of negotiations between the two major economies. Trade facilitation Back in April 2020, the U.S. Trade Representative (“USTR”) released a statement describing meetings between Brazilian President Jair Bolsonaro and President Donald Trump and ambitious plans to strengthen trade and economies ties.

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Using WROs to Fight Forced Labor

Forced Labor is the third most lucrative illicit trade, behind only drugs and weapons, and has an annual trade value of roughly $150 Billion. Right now, over 40 million people around the world are victims of some type of forced labor, including modern slavery, human trafficking, etc.

Thankfully, U.S. Customs and Border Protection has been working to curb this inhumane practice.

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The Caribbean Basin Trade Partnership Act Expired October 1 – What You Need to Know

Co-Authored by Sharath Patil

The Caribbean Basin Trade Partnership Act (“CBTPA”) is an Act of U.S. legislation which expired on October 1, 2020. The CBTPA sought to strengthen Caribbean basin economies by extending preferential trade and tariff treatment and increase U.S. export opportunities in those countries. Upon the expiration of the CBTPA at midnight on October 1, 2020, importers may not file otherwise CBTPA-eligible without the payment of duties and other fees set at normal trade relation duty rates.

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NEW LIST 2- SECTION 301 EXTENSIONS

On June 25, 2020, the Office of the United States Trade Representative (USTR), requested the public to submit comments regarding potential product exclusion extensions for items subject to Section 301 Tariffs. This comment period specifically applied to products that were included on List 2, which went into effect on August 23, 2018.

List 2 imposed 25 percent additional duties on 279 eight-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) and had an annual trade value of $16 Billion.

On September 18, 2018, USTR provided the public with an exclusion process; then September 2019, USTR granted a number of exclusions that were set to expire on September 20, 2020. In the June 25th Notice, commenters were asked a variety of questions relating to their supply chains, such as…

whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries; any changes in the global supply chain since August 2018 with respect to the particular product, or any other relevant industry developments; and efforts, if any, importers or U.S. purchasers have undertaken since August 2018 to source the product from the United States or third countries.

The June 25th announcement was made via federal register notice and stated that requests for exclusion extensions were to be submitted no later than […]

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