On May 10, the US International Trade Commission (ITC) issued a Federal Register notice stating that it will conduct an investigation into the economic impacts of the Section 301 and 232 (global steel and aluminum) tariffs on US industries.  See Notice.

The ITC will hold a hearing, and accept pre-hearing and post hearing briefs.  The following are the relevant dates:

  • July 6, 2022: Deadline for filing requests to appear at the public hearing.
  • July 8, 2022: Deadline for filing prehearing briefs and statements.
  • July 14, 2022: Deadline for filing electronic copies of oral hearing statements.
  • July 21, 2022: Public hearing.
  • August 12, 2022: Deadline for filing post-hearing briefs and statements.
  • August 24, 2022: Deadline for filing all other written submissions.
  • March 15, 2023: Transmittal of Commission report to Committees.

This investigation, conducted pursuant to Section 332, may be used by the USTR to determine what products should be removed from Section 301 tariffs. Importers should consider participating in the Section 332 proceedings to obtain relief from 301 tariffs. 

On May 5, the United States Trade Representative (USTR) published a Notice requesting comments from domestic industry members benefitting from the Section 301 tariffs as to whether the USTR should continue to impose Section 301 tariffs for lists 1, 2, 3, and 4A.  USTR is required to review the necessity of Section 301 actions four years after implementation.

USTR stated in its Notice that it was taking action in two Phases.  In Phase One, USTR is requesting only for comments from parties that are benefitting from the Section 301 tariffs. The comments are due and must be filed by 11:59pm on July 5 (List 1) and 11:59pm on August 22 (List 2, 3 and 4A). USTR has indicated it will not make the comments public, but will summarize them when publishing its determination on whether or not to continue the Section 301 tariffs. In Phase Two, the USTR will issue a separate notice and take comments from all interested parties on the effectiveness of the 301 action and the impact of the action on the US economy and consumers. 

Based on recent comments from the Biden administration, it is interested in easing Section 301 tariffs on certain products in order to mitigate inflation and align with this administration’s trade objectives. Accordingly, it is likely that Section 301 tariffs may be modified or reduced based on Phase Two comments. Importers should consider filing comments to obtain relief from Section 301 tariffs and protect their appeal rights.

Russia Sanctions:  The UK designated 63 individuals this week, including several war correspondents embedded with Russian forces in Ukraine that work at Channel One, a major state-owned media outlet in Russia.  The UK also designated one entity, Evraz PLC, a UK-incorporated holding company of a multinational steel manufacturing and mining company group.  Additionally, the UK made several amendments regarding previously-designated individuals and entities.

There is media reporting that the EU is considering announcing a sixth round of sanctions against Russia, but no official announcements have been released.  Still, a new package of sanctions is expected, barring material reduction of the Russian invasion of Ukraine.

General Licenses and Clarifications:  The UK issued a general license to allow the continuation of business with the North American subsidiaries of the recently designated Evraz PLC until September 2, 2022.

The U.S. published three new general licenses (“GLs”) and updated two previously-issued GLs this week.  The new general licenses authorize: (i) transactions with Gazprom Germania GmbH (and entities owned 50 percent or more by Gazprom Germania GmbH) until September 30, 2022; (ii) wind-down transactions with Amsterdam Trade Bank NV until July 12, 2022; and (iii) certain transactions in connection with patent, trademark, copyright, or other forms of intellectual property protection in the U.S. or Russia.  The updated GLs: (i) added Sberbank Switzerland to GL 26A, which authorizes wind-down transactions until July 12, 2022; and (ii) clarified that GL 7A, which authorizes overflight payments, emergency landings, and air ambulance services in the Russian Federation, does not authorize any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.

Export:  The UK announced a ban on services exports to Russia.  This will include a ban on providing management consulting, accounting, and public relations services to Russia, but the full scope of the services that will be covered has not been announced.

The EU removed Russia from all European Union general export authorizations.  Previously exporters were able to utilize the following general export authorizations for exports to Russia: (i) EU003 for items that are re-exported after being repaired or replaced in the EU, (ii) EU004 for items that are temporarily exported for the purpose of an exhibition or fair, and (iii) EU005 for certain telecommunications items.

The U.S. issued several new FAQs clarifying its export regulations with respect to Russia and Belarus.  These FAQs cover topics including: (i) licensing requirements, (ii) the license application review policy, (iii) the Foreign Direct Product Rule, (iv) the De Minimis Rules, (v) excluded countries, (vi) luxury goods, (vii) license exceptions, and (viii) updates to Country Group designations and the Country Chart.

In ruling NY N325496 (April 22, 2022), Customs and Border Protection (CBP) discussed the tariff classification of an emergency hammer from China. The merchandise under consideration is a composite good that is designed for use in vehicles. It consists of a stainless-steel window breaker, a stainless-steel hammer, a stainless-steel seat belt cutter, a plastic ice scraper, and an analog tire pressure gauge all in one tool. The pressure gauge portion of the tool provides measurements in pounds per inch (PSI). The item is made of 80% plastic components and 20% base metal components, measures 6 inches tall by 3 inches wide by 1 inch thick, and weighs approximately 0.25 kilograms.

In order to classify the emergency hammer, CBP turned to the General Rules of Interpretation (GRIs) within the Harmonized Tariff Schedule of the United States (HTSUS). Per CBP, the merchandise is considered a composite good within the meaning of GRI 3(b), which states that “mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.” CBP also determined that no one component of the emergency hammer imparts the essential character, and as such turned to GRI 3(c). This GRI states that “when goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”

CBP stated in its decision that the tire pressure gauge in heading 9026, HTSUS, merits equal consideration to the item’s window breaker, hammer, seat belt cutter, and ice scraper. Because the tire pressure gauge’s classification occurs last in numerical order, the tire pressure gauge would be used to determine the classification of the merchandise. As such, CBP determined that the applicable subheading for the emergency hammer was 9026.20.8000, HTSUS, which provides for “Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 9014, 9015, 9028 or 9032; parts and accessories thereof: For measuring or checking pressure: Other.” The rate of duty is free.

Additionally, pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, Chinese products under subheadings 9026.20.8000, HTSUS, unless specifically excluded, are subject to an additional 7.5% ad valorem duty rate. As such, the chapter subheading 9903.88.15 must be reported in addition to subheading 9026.20.8000, HTSUS.

Russia Sanctions:  The UK designated 63 individuals this week, including several war correspondents embedded with Russian forces in Ukraine that work at Channel One, a major state-owned media outlet in Russia.  The UK also designated one entity, Evraz PLC, a UK-incorporated holding company of a multinational steel manufacturing and mining company group.  Additionally, the UK made several amendments regarding previously-designated individuals and entities.

There is media reporting that the EU is considering announcing a sixth round of sanctions against Russia, but no official announcements have been released.  Still, a new package of sanctions is expected, barring material reduction of the Russian invasion of Ukraine.

General Licenses and Clarifications:  The UK issued a general license to allow the continuation of business with the North American subsidiaries of the recently designated Evraz PLC until September 2, 2022.

The U.S. published three new general licenses (“GLs”) and updated two previously-issued GLs this week.  The new general licenses authorize: (i) transactions with Gazprom Germania GmbH (and entities owned 50 percent or more by Gazprom Germania GmbH) until September 30, 2022; (ii) wind-down transactions with Amsterdam Trade Bank NV until July 12, 2022; and (iii) certain transactions in connection with patent, trademark, copyright, or other forms of intellectual property protection in the U.S. or Russia.  The updated GLs: (i) added Sberbank Switzerland to GL 26A, which authorizes wind-down transactions until July 12, 2022; and (ii) clarified that GL 7A, which authorizes overflight payments, emergency landings, and air ambulance services in the Russian Federation, does not authorize any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.

Export:  The UK announced a ban on services exports to Russia.  This will include a ban on providing management consulting, accounting, and public relations services to Russia, but the full scope of the services that will be covered has not been announced.

The EU removed Russia from all European Union general export authorizations.  Previously exporters were able to utilize the following general export authorizations for exports to Russia: (i) EU003 for items that are re-exported after being repaired or replaced in the EU, (ii) EU004 for items that are temporarily exported for the purpose of an exhibition or fair, and (iii) EU005 for certain telecommunications items.

The U.S. issued several new FAQs clarifying its export regulations with respect to Russia and Belarus.  These FAQs cover topics including: (i) licensing requirements, (ii) the license application review policy, (iii) the Foreign Direct Product Rule, (iv) the De Minimis Rules, (v) excluded countries, (vi) luxury goods, (vii) license exceptions, and (viii) updates to Country Group designations and the Country Chart.

Russia Sanctions:  There were limited developments this week.  There has been speculation that the EU would release its sixth round of sanctions against Russia, but no updates have been reported thus far.  The new package of sanctions is still expected soon.  The U.S. and UK also did not expand their list of designations this week.  However, the UK published amendments for nearly 200 previously-designated individuals that remain subject to an asset freeze.  The amendments were limited to revising reported dates of birth, addresses, and additional information regarding the basis of the designation.

General Licenses and Clarifications:  The UK published a general license that allows transactions with Sberbank CIB (UK) Ltd, or any entity it owns or controls in the UK for the UK subsidiary, to make payments for (i) basic needs, fees; (ii) service charges from holding and maintenance of funds; and (iii) the provision of legal services.

The UK issued separate a general license that permits officers of (i) the Financial Conduct Authority and (ii) any other organization authorized by Her Majesty’s Treasury to carry out any action necessary to comply with a UK court order, a forfeiture notice, or external orders.  The general license also permits activities for asset recovery purposes.

This week, European Commission President Ursula von der Leyen clarified during a press conference that paying for Russian gas in rubles is a breach of EU sanctions.  “To pay in rubles – if this is not foreseen in the contract – is a breach of our sanctions…Companies with such contracts should not accede to the Russian demands.  This would be a breach of the sanctions, so a high risk for the companies.”  This statement came after Russia suspended gas deliveries to Poland and Bulgaria after they refused to pay with rubles.

EU Proposal to Suspend All Duties on Imports from Ukraine

The EU announced a proposal to suspend import duties on all Ukrainian goods for one year.  This would also apply to all anti-dumping and safeguard measures on Ukrainian steel.  The proposal must still be approved by the European Parliament and the Council of the European Union.

 

In ruling NY N324932 (Apr. 13, 2022), Customs and Border Protection (CBP) discussed the tariff classification of an outdoor security camera system from China. The camera system, known as the Outdoor Wire-free Security Camera, is a wireless home security camera that consists of the following items: two wire-free outdoor cameras “EufyCam 2C” (model number T8113S), the “HomeBase 2” (model number T8010X), a user manual, marketing materials, a power adapter, an Ethernet cable, wall mounts, a reset pin needle, two mounting screw packs, a USB charging cable, a HomeKit card, and an installation positioning card. All of the items are imported together and packaged for retail sale as a set.

Once imported, the two wire-free cameras are connected to the HomeBase unit via Wi-Fi – which allows the user to view live footage or recordings captured by the cameras. The cameras have a 135-degree field of view, a built-in spotlight, a 100-decibel siren, and motion detection capabilities for both pets and humans. If motion is detected, the camera will begin to capture video and transmit the “real-time” video back to the HomeBase unit and the user’s mobile phone for remote viewing or recording. The cameras have no internal recording capabilities.

CBP stated that the outdoor cameras impart the essential character of the set. As such, the cameras, which are used as electronic surveillance tools to provide security to the user’s home, are used to classify the product. CBP determined that the applicable subheading for the outdoor camera security system is 8525.89.3000, HTSUS, which provides for “transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders: Television cameras, digital cameras and video camera recorders: Television cameras: Other.”  The rate of duty is free.

Additionally, pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, Chinese products under subheadings 8525.89.3000, HTSUS, unless specifically excluded, are subject to an additional 25% ad valorem duty rate. As such, the chapter subheading 9903.88.03 must be reported in addition to subheading 8525.89.3000, HTSUS.

 

Russia Sanctions:  The UK and EU each made over 200 additional designations.  The EU designated several banks that the US previously had sanctioned, including Bank Otkritie, Novicombank, Sovcombank, and VTB Bank.  Both the EU and the UK designated several oligarchs including Alexander Petaykin (associated with Trans Stroy), Evgeny Zubitskiy (Industrial Metallurgical Holding), Grigory Berezkin (ESN Group), and Said Kerimov (Polyus Gold), along with over 100 members of the People’s Council of the so-called Luhansk People’s Republic and of the People’s Council of the so-called Donetsk People’s Republic.  The EU and UK also amended several previously-made designations.

Export & Import Controls:  The UK, U.S., and EU all announced new export or import controls.  The UK prohibited the import, acquisition, supply, and delivery of certain iron and steel products from Russia.  It also prohibited the export of oil refining goods and technology, quantum computing and advanced materials goods and technology, and certain luxury items to Russia.

The U.S. expanded its export license requirements for Russia and Belarus to cover all items on the Commerce Control List (“CCL”).  Previously the restriction only applied to categories 3-9 of the CCL.  Correspondingly, the U.S. updated the Russia/Belarus foreign direct product rule to apply to all items on the CCL.

The EU also introduced restrictions on the import of certain seafoods, chemicals, woods, cement, glass, silver, aluminum, coal, and other solid fossil fuels from Russia.  It further prohibited the export to Russia of a swath of products identified as contributing to “the enhancement of Russian industrial capacities,” and extended its prohibition on the export of banknotes to Russia to also include export to Belarus.  Finally, the EU prohibited road transportation businesses (i.e. freight companies) established in Russia or Belarus from transporting goods by road within the EU.

Financial & Business Restrictions:  EU persons are now prohibited to register, provide an office or address to, or to provide management services to, a trust or similar legal arrangement having as trustor or beneficiary Russian nationals, persons residing in Russia, legal persons present in or organized under the laws of Russia, or persons 50 percent or more owned by such persons.  The EU also prohibited access to a variety of public procurement and public financing mechanisms for any Russian national, or a legal entity or person established in Russia.  Additionally, the EU prohibited providing crypto-asset wallet, account, or custody services to Russian nationals, or legal persons in Russia, if the value is greater than 10,000 EUR.

Aviation & Maritime:  The U.S. revised License Exception Aircraft, Vessels and Spacecraft (AVS) to limit its availability for certain Belarus-related aircraft, and added 10 additional planes to its list of restricted aircraft, including planes owned by Aeroflot, Utair and Belavia.  The EU prohibited providing access to EU ports to any vessels registered under a Russian flag.

 

Customs and Border Protection (CBP) has announced that it will be issuing known importer letters to importers the agency has identified as having previously imported merchandise that may be subject to the Uyghur Forced Labor Prevention Act (UFLPA). CBP aims to issue these letters in advance of June 21, 2022 – which is when the UFLPA’s rebuttal presumption goes into effect – in order to encourage notified importers to address any forced labor issues in their supply chains in a timely manner.

The UFLPA’s rebuttable presumption states that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China, or produced by an entity on a list required by clause (i), (ii), (iv) or (v) of section 2(d)(2)(B) of the UFLPA, will be prohibited from entry into the United States.

Notably, importers that don’t receive a known importer letter are still liable to face enforcement. Per CBP’s announcement, if an importer does not receive a letter, it “does not mean that [their] supply chain is free of forced labor.” The announcement explicitly states that “all importers are expected to review their supply chains thoroughly and institute reliable measures to ensure imported goods are not produced wholly or in part with convict labor, forced labor, and/or indentured labor (including forced or indentured child labor).”

CBP’s announcement regarding the known importer letters can be found here.

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

UPDATE: Uyghur Forced Labor Prevention Act Signed into Law | International Trade Law (cmtradelaw.com)

U.S. Senators Introduce the Slave-Free Business Certification Act | 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 Crowell & Moring Partners’ Dj Wolff and Carlton Greene, who both specialize in economic sanctions, about the U.S. and global economic response to the Russia-Ukraine conflict and the impact on global supply chain. Specifically, they will discuss what listeners should be looking out for, and help them expect the unexpected.

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