An overview on new Russian sanctions and export controls issued by the U.S. (OFAC and BIS) and the UK focusing on the Russian financial, military, and LNG industries.

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The Corporate Sustainability Due Diligence Directive represents a significant step in aligning corporate activities within sustainable and ethical practices, reinforcing the EU’s commitment to environmental and human rights standards.

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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 session, hosts and International Trade Practice Leaders Nicole Simonian and Dj Wolff talk with Crowell lawyers David Stepp and Simeon Yerokun about Uyghur Forced Labor law and its recent application to the auto industry.

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Crowell & Moring LLP is pleased to announce a significant legal victory on behalf of our clients, Apiário Diamante Comercial Exportadora Ltda. and Apiário Diamante Produção e Comercial de Mel Ltda. (collectively known as “Supermel”). The United States Court of International Trade, in a decision issued by Judge Timothy C. Stanceu on May 30, 2024, has remanded the U.S. Department of Commerce’s final determination in the antidumping duty investigation on Raw Honey from Brazil.

In its April 2022 final determination, the Department of Commerce had assigned Supermel a punitive dumping margin of 83.72%, a decision based on the application of total adverse facts available (“AFA”).  The court found that this decision was unsupported by substantial evidence, noting multiple deficiencies in Commerce’s analysis.  Notably, the court determined that the agency wrongly relied on differences between information submitted by Supermel and its beekeepers and found no deficiencies in the accounting records provided by Supermel.  The court also found that Commerce had not adequately notified Supermel of alleged discrepancies in their submissions, nor provided sufficient opportunity to remedy these deficiencies. 

The court ordered the Department of Commerce to reconsider its application of AFA and determine a new dumping margin for Supermel based on the existing record.  Commerce is required to submit the remand redetermination within 60 days, followed by a 45-day comment period. 

Crowell & Moring LLP is dedicated to advocating for fair trade and supporting our clients in navigating the complexities of international trade law. This victory exemplifies our commitment to achieving favorable outcomes for our clients through diligent representation and legal expertise.

For more information, please contact:

Daniel J. Cannistra
Partner, Crowell & Moring LLP
Phone: (202) 624-2902
Email: dcannistra@crowell.com

Pierce J. Lee
Counsel, Crowell & Moring LLP
Phone: (202) 508-8780
Email: plee@crowell.com

The Office of the United States Trade Representative (“USTR”) today published a request for comments on the proposed modifications and machinery exclusion process in its Four-Year Review of Section 301 tariffs (the “Review”), published last week. The Review did not recommend removing any subheadings from Section 301 tariffs, but rather proposed the following increases:

ProductActionGoes into effect:
Battery parts (non-lithium-ion batteries)      Increase rate to 25%2024
Electric vehicles        Increase rate to 100%2024
Facemasks      Increase rate to 25%2024
Lithium-ion electrical vehicle batteries         Increase rate to 25%2024
Lithium-ion non-electrical vehicle batteriesIncrease rate to 25%2026
Medical gloves           Increase rate to 25%2026
Natural graphiteIncrease rate to 25%2026
Other critical mineralsIncrease rate to 25%2024
Permanent magnetsIncrease rate to 25%2026
Semiconductors         Increase rate to 50%2025
Ship to shore cranes   Increase rate to 25%2024
Solar cells (whether or not assembled into modules)Increase rate to 50%2024
Steel and aluminum productsIncrease rate to 25%2024
Syringes and needles             Increase rate to 50%2024

The Review also proposes a framework for establishing an exclusion process for machinery used in domestic manufacturing under HTS Chapters 84 and 85, as well as 19 types of solar manufacturing equipment covered under Chapter 84. No mention was made in the Review of a possible extension of Section 301 exclusions currently in place for the 352 assorted and 77 Covid-19-related exclusions scheduled to expire on May 31, 2024; however, a separate Federal Register notice published today details extensions of certain exclusions through May 31, 2025. All exclusions currently in place will be extended at least until June 14, 2025, after which exclusions currently in place for 102 products–for which USTR has determined no effect of tariffs on shifting production from China with no comments submitted to the contrary–will expire.

Per USTR, interested parties are invited to comment on the following:

  • The effectiveness of the proposed modification in obtaining the elimination of or in counteracting China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
  • The effects of the proposed modification on the U.S. economy, including consumers.
  • The scope of the product description to cover ship-to-shore cranes under subheading 8426.19.00 (Transporter cranes, gantry cranes and bridge cranes).
  • With respect to facemasks, medical gloves, and syringes and needles, whether the tariff rates should be higher than the proposed rates.
  • With respect to facemasks, whether additional statistical reporting codes under tariff subheading 6307.90.98 should be included.
  • Whether the tariff subheadings identified for each product and sector adequately cover the products and sectors included in the President’s direction to the Trade Representative.

USTR is also seeking comments on whether the proposed exclusions of subheadings of Chapters 84 and 85 included in the notice should be altered, as well as comments on the scope of exclusions relating to solar manufacturing equipment.

The comment docket will open May 29 and will remain open until June 28, 2024. USTR is expected to post a copy of questions for which it seeks comments on May 24, 2024. Please reach out to [insert attorney name here] if you wish to have Crowell submit comments on your behalf.

Read a copy of the notice here.

Crowell and Moring, LLP continues to monitor developments in the customs and trade remedies space and their potential impact on business and customers going forward.

Following the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party (“Chinese Select Committee”) request in January calling for a strengthened enforcement of the UFLPA, DHS adds 26 new entities to the UFLPA entity list.

The United States Department of Homeland Security (“DHS”) announced today the addition of 26 Chinese firms to the Uyghur Forced Labor Prevention Act (“UFLPA”) Entity List for allegedly sourcing cotton from the Xinjiang Uyghur Autonomous Region (“XUAR”). Among the parties added to the Entity List are several warehousing and logistics providers.

While public pressure coupled with demands from Congress calls for stricter enforcement and expansion of scope for the UFLPA, the addition of new entities demonstrates that cotton remains an area of high priority despite recent enforcement actions targeting other industries.

These new Entity List additions are notable inasmuch as they largely comprise firms involved in the storage and trade of cotton products from the XUAR, sending a clear signal that DHS is taking more serious enforcement against firms attempting to circumvent U.S. forced labor regulations and those parties facilitating the evasion of forced labor laws.

Crowell & Moring, LLP continues to monitor developments in the forced labor prevention space and their potential impact on customers and businesses going forward.

This week, President Biden has directed the United States Trade Representative (“USTR”) to take further action against Chinese unfair trading practices following the release of the statutory four-year review of Section 301 tariffs against the People’s Republic of China (“PRC”). Per Biden’s direction, Ambassador Katherine Tai announced that she will be proposing modifications to existing China tariffs under Section 301, while also maintaining existing tariffs on certain goods. Among the proposed modifications to Section 301 tariffs are the addition of tariffs for certain chemicals and machinery, as well as increases to certain products as seen in the chart below. The proposed tariff additions and modifications would cover an additional $18 billion worth of goods, bringing the total amount of China-origin goods covered by Section 301 to around $370 billion.

ProductActionGoes into effect:
Battery parts (non-lithium-ion batteries)      Increase rate to 25%2024
Electric vehicles        Increase rate to 100%2024
Facemasks      Increase rate to 25%2024
Lithium-ion electrical vehicle batteries         Increase rate to 25%2024
Lithium-ion non-electrical vehicle batteriesIncrease rate to 25%2026
Medical gloves           Increase rate to 25%2026
Natural graphiteIncrease rate to 25%2026
Other critical mineralsIncrease rate to 25%2024
Permanent magnetsIncrease rate to 25%2026
Semiconductors         Increase rate to 50%2025
Ship to shore cranes   Increase rate to 25%2024
Solar cells (whether or not assembled into modules)Increase rate to 50%2024
Steel and aluminum productsIncrease rate to 25%2024
Syringes and needles             Increase rate to 50%2024

In addition to these new tariffs, the USTR report recommends the establishment of an exclusion process for certain products, such as manufacturing equipment—particularly solar manufacturing equipment—though it fails to address exclusions currently in place for certain medical and non-medical products, which are set to expire at the end of May.

The USTR will issue a Federal Register notice next week to announce procedures for interested parties to comment on the proposed modifications, as well as to request information concerning the new exclusion process for machinery used in domestic manufacturing.

Finally, the report advocates for more funding to U.S. Customs and Border Patrol (“CBP”) to enhance the agency’s enforcement capacity with regard to Section 301 actions.

Crowell & Moring, LLP continues to monitor developments in the customs and trade remedies space and their potential impact on customers and businesses going forward.

On Tuesday, the U.S. Department of Commerce Bureau of Industry and Security’s Office of Antiboycott Compliance (OAC) issued an advisory regarding the Turkish government’s announcement that it will “suspend all exports and imports to and from Israel until the Israeli government allows an uninterrupted and sufficient flow of humanitarian aid into Gaza.”

The OAC advisory highlights that U.S. anti-boycott laws and regulations prohibit “U.S. persons” from “taking certain actions in furtherance or support of an unsanctioned foreign boycott maintained by a country against a country friendly to the United States and require reporting of receipt of a boycott-related request to BIS,” and that companies operating in in Türkiye or doing business with companies there should be aware of “any requests to refrain from importing or exporting goods to or from Israel or to provide certification that the goods are not of Israeli origin or do not contain Israeli-origin components or materials.”

In this context, U.S. persons can include U.S. entities and their non-U.S. subsidiaries, partnerships, affiliates, branches, offices, or other permanent foreign establishments. Therefore, U.S. entities and those with a U.S. parent should be mindful of this OAC update when considering transactions in Turkey, particularly of any new requests they receive from Turkish customers or counterparties related to Turkey’s announcement.

On Thursday, May 9, 2024, the U.S. Department of Commerce Bureau of Industry and Security (BIS) added 37 Chinese entities to the Entity List. Among them were technology companies (predominately those tied to quantum computing), manufacturing firms, and research institutions. No person may export, reexport, or transfer any items subject to the Export Administrative Regulation (EAR) to these persons without a license.   BIS will review any license requests from these entities with a presumption of denial.

BIS designated these parties because they: (i) shipped U.S. controlled items to Russia, (ii) attempted to acquire controlled items to aid China’s military or quantum technologies capabilities, or (iii) had ties to, or were involved with, China’s “High Altitude Balloon” that overflew the United States in February 2023. These additions are part of the U.S.’s broad strategy to impede both China’s access to critical and emerging technologies (CET) and deter support for Russia’s invasion of Ukraine. Last week the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued new sanctions on Chinese (and other) entities supporting Russia’s invasion of Ukraine.

If you have any questions about the recent additions to the BIS Entity List, contact Crowell’s International Trade Team.

In this session, hosts and International Trade Practice Leaders Nicole Simonian and Dj Wolff talk with Crowell lawyers Jeremy Iloulian and Laurel Saito about the significant new sanctions and export control authorities included in the recently enacted National Security Supplemental fiscal package. While this legislation is best known for providing U.S. foreign aid commitments for Ukraine, Israel, and Taiwan, it also contains critical trade related provisions that (i) expand the statute of limitations for U.S. sanctions violations; (ii) give the President new authorities to coordinate sanction efforts with the US and UK; (iii) expand sanctions and export controls on Iran (with some targeting Chinese financial institutions); and (iv) provide for new sanctions authorities targeting terror groups.

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