On February 18, 2021, the European Commission unveiled its new trade strategy. The strategy aims to address the economic fallout from the coronavirus, climate change, and growing international tensions, while also reaffirming support for a rules-based multilateral trading system. The proposed measures range from WTO reform and digital trade initiatives, to tackling forced labor by developing enforcement mechanisms and requiring companies to monitor supply chains.

Valdis Dombrovskis, Executive Vice President of the European Commission, stated that the EU is “pursuing a course that is open, strategic and assertive, emphasizing the EU’s ability to make its own choices and shape the world around it through leadership and engagement, reflecting our strategic interests and values.”

The announcement comes in the context of China’s economic rise and on the heels of the December, 2020 agreement in principle between the EU and China on negotiations for a Comprehensive Agreement on Investment (CAI). In 2020, China overtook the U.S. as the EU’s top trade in goods partner at $710 billion. An outcome spurred, in part, by China’s ability to recover from the economic impacts of COVID-19 more quickly than other major trading partners.

The ambitions new strategy highlights the EU’s appetite to take on a leadership role in a post-COVID trading system while offering an opportunity for increased transatlantic engagement with respect to China.

An outline of the strategy is provided below:

WTO REFORM

The Commission will:

  1. Seek the adoption of a first set of reforms of the WTO focusing on enhancing the WTO’s contribution to sustainable development, and launch negotiations on reinforced rules to avoid distortions of competition due to state intervention. It will give priority to enhancing transatlantic cooperation on WTO reform.
  2. Work to restore a fully-functioning WTO dispute settlement with a reformed Appellate Body.

SUPPORTING THE GREEN TRANSITION AND PROMOTE RESPONSIBLE AND SUSTAINABLE VALUE CHAINS

The Commission will:

  1. Take forward initiatives and actions that promote climate and sustainability considerations in the WTO.
  2. Seek commitments from G20 partners on climate neutrality, strengthen cooperation on other aspects of the green deal such as biodiversity, sustainable food policy, pollution and the circular economy, and propose to make the respect of the Paris agreement an essential element in all future agreements.
  3. Improve the effective implementation and enforcement of sustainable development chapters in trade agreements through the early review in 2021 of the 15-point Action Plan. The outcome of the review will feed into ongoing and future negotiations.
  4. Promote sustainable and responsible value chains through a proposal on mandatory due diligence, including effective action and enforcement mechanisms to ensure that forced labor does not find a place in the value chains of EU companies. Bridging the time towards binding provisions, the Commission will provide guidance to assist EU business in taking the appropriate measures already now in line with international due diligence guidelines and principles.

SUPPORTING THE DIGITAL TRANSITION AND TRADE IN SERVICES

The Commission will:

  1. Seek the rapid conclusion of an ambitious and comprehensive WTO agreement on digital trade, including rules on data flows, in full compliance with the EU’s data protection framework, and provisions on enhancing consumer trust ensuring a high level of consumer protection.
  2. Explore the possibility of closer regulatory cooperation with like-minded partners on issues of relevance for digital trade.

STRENGTHENING THE EU’S REGULATORY IMPACT

The Commission will:

  1. Enhance regulatory dialogues with like-minded partners in strategic areas for EU competitiveness. This will require early identification of priority areas for regulatory cooperation and closer dialogue with EU and international standard organizations.
  2. Develop a closer transatlantic partnership on the green and digital transformation of our economies including through the EU-US Trade and Technology Council.

STRENGTHENING THE EU’S PARTNERSHIPS WITH NEIGHBORING, ENLARGEMENT COUNTRIES AND AFRICA

The Commission will:

  1. Deepen trade and economic relations with other countries in Europe, including the Western Balkans and countries that have concluded DCFTAs with the EU, focusing in particular on closer regulatory cooperation in support of the green and digital transitions. It will modernize its trade and investment relations with those countries in the Southern Neighborhood interested in fostering closer integration with the European Union.
  2. Reinforce its engagement with African countries by:
  3. enhancing political dialogue and cooperation with the African Union and its Members and the smooth implementation of AfCFTA, including engagement with the private sector and promoting common standards in Africa to enhance regional and continental integration.
  4. deepening and widening its existing trade agreements with African regional economic communities and strengthen their sustainability dimension.
  5. exploring further the possibility of enhancing links and synergies between different trade arrangements with African countries, for example through more harmonized rules of origin in trade with the EU.
  6. pursuing sustainable investment agreements with Africa and the Southern Neighborhood.

STRENGTHENING THE EU’S FOCUS ON IMPLEMENTATION AND ENFORCEMENT OF TRADE AGREEMENTS, AND ENSURE A LEVEL PLAYING FIELD

The Commission will:

  1. Seek to consolidate the EU’s partnerships with key growth regions – in the Asia Pacific and Latin America – by creating the conditions to conclude negotiations and ratify outstanding bilateral agreements.
  2. Make full use of the Chief Trade Enforcement Officer’s (CTEO) role to maximize benefits of negotiated outcomes for companies, in particular SMEs and farmers, and to eliminate hurdles that impair on the potential of the agreements to deliver, including on sustainable development.
  3. Further strengthen the EU’s tools to confront new challenges and to protect European companies and citizens from unfair trading practices, including via the preparation of an anti-coercion instrument. In addition, the Commission will explore options for an EU strategy for export credits.
  4. Develop new online tools to support EU businesses, in particular SMEs.

For more information please see our previous posts below or reach out to John Brew, Jeffrey Snyder, Frances Hadfield, or Clayton Kaier

European Union (EU) Archives | International Trade Law (cmtradelaw.com)

On February 18, 2021, U.S. Customs and Border Protection (CBP) released a one-pager on a July, 28 2020, Administrative Ruling related to domestic warehouses and fulfillment centers.

What is the Scope of this Ruling?

19 U.S.C. § 1321(a)(2)(c) enables CBP to admit qualifying merchandise duty- and tax-free provided that the merchandise is imported by “one person on one day” and has a total fair retail value in the country of shipment of $800 or less. On July 28, 2020, CBP issued an administrative ruling recognizing fulfillment centers and domestic warehouses as the “one person” for unsold merchandise. Under this ruling, foreign owners/sellers of unsold merchandise may also qualify as the “one person” provided their identity is presented to CBP and the total value of their merchandise imported on one day is $800 or less.

What is CBP Doing to Enforce?

Through informed compliance, CBP is working closely with its trade partners to identify and educate entities who are affiliated with large volumes of ineligible shipments. CBP may take enforcement action, including against egregious and repeat violators, including placing holds on ineligible shipments, revoking Section 321 privileges, or requiring formal entry until sustained compliance is achieved.

What Can You Do to Facilitate Compliance?

Domestic Warehouse and Fulfillment Center Consignees who receive over $800 of unsold merchandise in one day can coordinate with merchandise owners to help ensure their shipments comply with Section 321 regulations. Ø Merchandise Owners may qualify for Section 321 provided the total value of their shipments do not exceed $800 on one day, and their identity (first and last name or name of company) is presented to CBP via the manifest or Entry Type 86 filing. Ø Shippers and Carriers should refer to CBP’s CAMIR and CATAIR updates to ensure the merchandise owner’s identity is presented appropriately to CBP. See below examples.

For more information please see our previous posts below or reach out to John Brew, Frances Hadfield, or Clayton Kaier.

Customs Archives | International Trade Law (cmtradelaw.com)

On February 18, 2021, the House reintroduced the Uyghur Forced Labor Prevention Act (see press and bill) in the 117th Congress. Sponsored by Representatives James McGovern (D-MA), Chris Smith (R-NJ), Thomas R. Suozzi (D-NY), Vicky Hartzler (R-MO), Tom Malinowski (D-NJ), Mike Gallagher (R-WI), and Jennifer Wexton (D-VA), the legislation updates H.R. 6210 from the 116th Congress and is introduced less than a month after accompanying legislation from Senators Marco Rubio (R-FL), Jeff Merkley (D-OR).

The legislation would:

  • Prohibit all imports from the Xinjiang Uyghur Autonomous Region (XUAR) of China unless the Commissioner of U.S. Customs and Border Protection can certify that the goods being imported to the U.S. are not produced, either wholly or in part, with forced labor and the Commissioner submits to Congress a report outlining such a determination;
  • Authorize the President to apply targeted sanctions on anyone responsible for the labor trafficking of Uyghurs and other Muslim ethnic minorities;
  • Require financial disclosures from U.S. publicly traded businesses about their engagement with Chinese companies and other entities engaged in mass surveillance, mass internment, forced labor, and other serious human rights abuses in the XUAR;
  • Directs the Secretary of State to submit to Congress a public determination whether the practice of forced labor or other human rights abuses targeting Uyghurs and other Muslim minorities in the XUAR constitute crimes against humanity or genocide, and directs the Secretary to develop a diplomatic strategy to address forced labor in the XUAR; and
  • Require a strategy report from the Forced Labor Enforcement Task Force (established by the United States-Mexico-Canada Agreement Implementation Act) and regular updates on the steps taken to enforce the import prohibition on forced labor made goods from the XUAR.

For more information on actions addressing human rights and forced labor abuses, please see our previous posts below or contact

Joshua Boswell, Jeffrey L. Snyder  Frances P. Hadfield & Clayton Kaier

January 29, 2021 post

Forced Labor/U.K. Modern Slavery Act Archives | International Trade Law (cmtradelaw.com)

 

In ruling NY N317145 (February 10, 2021), Customs and Border Protection (CBP) discussed the classification of 100% nitrile rubber gloves, or “BestSafe-Nitrile Gloves.” As stated in the ruling, the gloves are seamless and disposable. They are used for medical purposes but are also multi-use, such as for the food processing, beauty, IT industries, etc.

CBP determined that the applicable subheading for the gloves is 4015.19.1010, HTSUS, which provides for Articles of apparel and clothing accessories (including gloves, mittens and mitts), for all purposes, of vulcanized rubber other than hard rubber: Gloves, mittens, and mitts: Other: Other: Seamless: Disposable.”  The general rate of duty is 3% ad valorem.

Less than three weeks after the group’s initial addition to the list of Foreign Terrorist Organizations, the Biden administration removed Ansarallah (the Houthis in Yemen) from the list on February 16, 2021.  As a result, Ansarallah is no longer blocked pursuant to OFAC’s Global Terrorism Sanctions Regulations and U.S. persons do not require authorization from OFAC to engage in activities or transactions with Ansarallah. Simultaneously, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) removed five general licenses and three frequently asked questions from its website, given that they are no longer necessary.

The reversal comes shortly after the initial designation of the group on the last full day of the Trump Administration.  Ansarallah, a political movement and militia group in Yemen, have controlled the government in Yemen since 2015.  A protracted civil war has been ongoing since that time.  The designation was met with concern from the United Nations and other international aid organizations that were concerned it would greatly reduce the supply of Yemen’s food and other essential goods, which is nearly all imported, at a time when Yemen is facing imminent danger of famine.  The State Department noted that the lifting of the designation was not acceptance of the group’s conduct but a recognition of the dire humanitarian needs facing Yemen.

In the first material sanctions-related action of the new U.S. Administration, on February 11, 2021, President Biden issued Executive Order 14014 (EO) imposing sanctions on Myanmar (Burma) in response to the February 1, 2021, military coup and subsequent detention of government leaders, politicians, and others there. The sanctions focus on the defense sector of the Burmese economy, its military, and current military government, but provide authority to expand the scope of the sanctions. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) subsequently sanctioned 10 individuals and three entities pursuant to the new authorities. Simultaneously, the Commerce Department’s Bureau of Industry and Security (BIS) tightened its existing licensing policy on Burma and previewed a potential substantial expansion of future export controls in the event the situation deteriorates further.

For more, please click here.

In light of increased U.S. actions and rising global concerns over reports of forced labor in Xinjiang, U.S. Customs and Border Protection (CBP) has issued the following Q&A responses:

General

Proof of Admissibility

Due Diligence/Best Practices

Miscellaneous

For more information on actions addressing human rights and forced labor abuses, contact our team and see previous posts below.

Forced Labor/U.K. Modern Slavery Act Archives | International Trade Law (cmtradelaw.com)

Xinjiang Archives | International Trade Law (cmtradelaw.com)

On February 10, 2021, the CIT issued a procedural order that requires all Section 301 cases to receive notice under a master case named “In Re Section 301 Cases, CIT Ct. No. 21-cv-00052.” The decision was made in an effort to streamline the more than 3,500 lawsuits the CIT has received from importers since September of last year. Additionally, the order requires a master answer from the United States to Answer Plaintiffs’ Complaints in a general manner and  defend against the pending lawsuits by March 12, 2021.

For more information on Section 301 tariffs please contact John Brew, Daniel Cannistra, Frances P. Hadfield, Brian McGrath, Walter (Sam) Boone, & Clayton Kaier  or refer to our previous posts below:

Section 301 Tariffs Archives | International Trade Law (cmtradelaw.com)

On February 11, 2021, the Biden Administration decided not to increase tariffs against the European Union. In a Federal Register notice released today (Feb 12th), the Administration announced that “The U.S. Trade Representative together with the affected United States industry have agreed that it is unnecessary at this time to revise the action in the Section 301 investigation involving the enforcement of U.S. rights in the World Trade Organization (WTO) dispute involving Large Civil Aircraft subsidies provided by certain current or former member States of the European Union.”

For more information on the U.S.-EU aircraft subsidy dispute and related tariffs please contact John Brew, Frances P. Hadfield, Spencer Toubia, Edward Goetz & Clayton Kaier or refer to our previous posts below:

Large Civil Aircraft Dispute 2021 Update: Section 301 Tariffs on New EU Goods | International Trade Law (cmtradelaw.com)

US Allows Tariffs On $7.5B Of EU Goods | International Trade Law (cmtradelaw.com)

USTR Adds Supplemental List of $4B Worth of Products to EU Airbus Dispute | International Trade Law (cmtradelaw.com)

EU Retaliatory Tariffs:  Preliminary List Proposed in Continuing Dispute with U.S. over Boeing/Airbus Subsidies. | International Trade Law (cmtradelaw.com)

Trump Administration Readies $11 Billion in Tariffs against EU and Schedules Section 301 Hearing in WTO Airbus Case | International Trade Law (cmtradelaw.com)

Global Trade Talks is a podcast that shares brief perspectives on key global issues on international trade, current events, business, law and public policy as they impact our lives. In this podcast, hosts Nicole Simonian and Ambassador Robert Holleyman talk to Dr. Jerrold Green, president and CEO of the Pacific Council on International Policy, about the Biden administration, the COVID-19 pandemic, and the west coast perspective on international trade.

Listen: Crowell.com | PodBean | SoundCloud | Apple Podcasts