American Trade & Manufacturing Blog

The Trump Administration’s First Trade Policy Agenda: A New “Economic Nationalism”?

Posted in Trade Negotiations, Trade Policy, World Trade Organization

On March 1, 2017, the Office of the United States Trade Representative (“USTR”) published a truncated version of the new Administration’s trade policy agenda for the coming year.  The agenda’s objectives are stated in broad terms, and the document suggests that a more detailed agenda will be forthcoming once the Senate confirms the Trump Administration’s new USTR.

Its objectives, however, present an initial outline of steps towards what White House Senior Adviser Steve Bannon recently characterized as a policy of “economic nationalism.”  At the Conservative Political Action Conference last month, Bannon explained that the President’s trade team is “rethinking how we’re [going to] reconstruct . . . our trade arrangements around the world.”

Notable aspects of the agenda include:

  • A reconsideration of the relationship between U.S. sovereignty and multilateral bodies like the World Trade Organization (“WTO”): “Resisting efforts by other countries . . . to advance interpretations that would weaken the rights and benefits of, or increase the obligations under, the various trade agreements to which the United States is a party.” The agenda emphasizes provisions in the WTO Dispute Settlement Understanding providing that dispute settlement findings would not add to obligations or diminish rights under the agreement.  It also notes that the WTO implementing legislation gives the President discretion to determine whether dispute settlement findings should be implemented as a matter of U.S. law.
  • A revival of unilateral U.S. action: “Strictly enforcing U.S. trade laws to prevent the U.S. market from being distorted by dumped and/or subsidized imports that harm domestic industries and workers.” The agenda includes references to possible self-initiation of antidumping and countervailing duty cases, as well as section 201 safeguards actions.  But the agenda goes further than imports, noting that “section 301can be a powerful lever to encourage foreign countries to adopt more market friendly policies.” Wilbur Ross, President Trump’s Secretary of Commerce, has emphasized maximizing U.S. leverage as one of world’s largest importers in efforts to expand opportunities in foreign markets.  Some of these unilateral actions could be used to create such leverage.
  • An objective explicitly linking trade with the health of the U.S. industrial base and U.S. national security preparedness: “Ensuring that United States trade policy contributes to the economic strength and manufacturing base necessary to maintain – and improve – our national security.” The national security implications of trade is a priority of National Trade Council director Peter Navarro, who has recently questioned what might happen if “it is not a benign ally buying up our companies, our technology, our farmland and our food supply chain, and ultimately controlling much of our defense industrial base.”  Considering trade as a potential national security threat could spur actions under provisions like Section 232 of the Trade Expansion Act of 1962 or the International Emergency Economic Powers Act.

Commerce Department Requests Information to Cut Red-Tape on Manufacturers

Posted in Manufacturing

On March 7, the Commerce Department will announce an opportunity for U.S. manufactures to help decrease the burden of regulations on their ability to do business.  The President asked the Secretary of Commerce for a report on reducing regulatory burdens and improving the permitting process for U.S. manufacturers.  To prepare the report, the Commerce Department is asking for information on how acquiring Federal permits and complying with Federal regulations on constructing, expanding, or operating manufacturing facilities are harming U.S. manufactures.  The information is due to the Commerce Department by March 31.

This is a unique opportunity to seek to reduce regulatory red-tape for your business.  It is also an important indication of the new Administration’s focus on promoting U.S. manufacturing and cutting regulations.  The Administration is hungry for specific ideas to meet those goals.  Therefore, it will be vital for U.S. manufacturers to step up and provide information on regulatory burdens.  We are ready to help you be a part of this important process.

Easing Sanctions Against Russia? Congress Says Not So Fast, Mr. President

Posted in Economic Sanctions

Despite early rumors that President Trump would lift the Obama Administration’s economic sanctions against Russia, it might not be so quick or so easy, if Congress has its way.  Two pieces of legislation have been introduced in Congress, the first aimed at inhibiting the President’s ability to ease the current Russian sanctions regime and the second providing for more robust sanctions than currently exist.

The first bill, the Russia Sanctions Review Act of 2017, was introduced in both the House and the Senate in early February, with bipartisan support.  Intended to allow Congressional oversight of any easing of the current sanctions regime against Russia, the bill would require President Trump, prior to the lifting of any sanctions, to report on the proposed changes and certify to Congress that Russia has ceased

“ordering, controlling, or otherwise directing, supporting, or financing, significant acts intended to undermine the peace, security, stability, sovereignty, or territorial integrity of Ukraine, including through an agreement between the appropriate parties; and

cyberattacks against the United States Government and United States persons.”

Once received, Congress would have 120 days to review the report and hold hearings as necessary.  This review period, during which the President would be prohibited from easing Russian sanctions, would allow both houses of Congress to pass a Joint Resolution of Disapproval on the proposed Presidential conduct.  While the President may veto any such congressional action, the bill then limits the lifting of sanctions for 10 days following the President’s veto.  In effect, the bill imposes a 4-month moratorium against any Presidential action intended to ease sanctions against Russia.

The second bill, the Counteracting Russian Hostilities Act of 2017, was introduced in the Senate, again with bipartisan support, but currently lacks a counterpart in the House.  The bill targets Russian cyber hacking and other “aggressive activities,” such as its conduct in Crimea, and provides a menu of potential sanctions that must be imposed against persons and entities that meet certain specified criteria.  The bill would impose asset freezes and visa bans on persons involved in Russia’s attempts to undermine cybersecurity and democratic institutions.  The proposed legislation also targets persons/entities that engage in certain transactions with the Russian intelligence and defense sectors, or involving Russia’s energy sector, Russian sovereign debt, or investments that facilitate Russia’s privatization of state-owned assets.  The menu of potential sanctions available to the President include, among other things, denials of Export-Import Bank assistance,  export licenses, and loans above $10 million from financial institutions; debarment from U.S. government contracting; and visa and entry restrictions.  Finally, while the bill does contain a Presidential waiver provision, it requires the President to submit a written determination that such a waiver is “vital” to U.S. national security interests or “will further enforcement” of the bill, and certify that Russia has made significant efforts to “reduce the number and intensity of . . . cyber intrusions.”

Senior U.S. Congressional Trade Counsel Stephen Claeys Joins Wiley Rein

Posted in Announcements

Wiley Rein LLP announced today that Stephen J. Claeys has joined as a partner in the renowned International Trade Practice. Mr. Claeys brings to the firm 25 years of experience advising members of Congress, senior White House and U.S. Department of Commerce officials, and clients on international trade law and policy, and supervising the enforcement of the U.S. trade remedies laws. He most recently served as trade counsel for the U.S. House of Representatives, Committee on Ways & Means, Subcommittee on Trade.

Mr. Claeys will provide legal and policy advice to the firm’s clients, with a focus on bilateral and multilateral trade agreements, trade remedies and safeguards, foreign market access barriers, e-commerce and digital trade, agriculture trade, and customs enforcement.

“Steve has unparalleled experience in the substantial, complex issues impacting our clients, and his recent role advising Members of Congress in all areas of multilateral trade negotiations, trade remedies, customs issues, and trade policy gives him an invaluable perspective on emerging trends in this dynamic area of the law,” said Alan H. Price, chair of the firm’s International Trade Practice. “Steve is an outstanding and talented lawyer with an incredible background in public service and in the private sector, making him an ideal addition to the team. We’re pleased to have him join the Trade Practice.”

In his prior congressional role, Mr. Claeys also served as House Ways and Means Committee staff lead on all areas of the Trans-Pacific Partnership agreement negotiations, as well as advising on other trade agreement negotiations. He drafted and helped secure passage of legislation on Trade Promotion Authority, amendments to the U.S. trade remedies law, reauthorization and restructuring of U.S. Customs and Border Protection, the U.S.-Panama Free Trade Agreement, and Permanent Normal Trade Relations with Russia.

Prior to his six years on the Hill, Mr. Claeys served as Deputy Assistant Secretary for Antidumping/Countervailing Duty Operations at the U.S. Department of Commerce, Import Administration, and served as a National Security Affairs Special Advisor to the White House, Office of the Vice President.

“Wiley Rein’s International Trade Practice has one of the country’s most elite trade remedy and trade policy teams,” said Mr. Claeys. “With an extraordinary record of winning large and complex trade cases on behalf of major U.S. industries, the team also helps clients navigate the policies and regulations governing our international economy. The group is among a limited number of practices that regularly serve as principal counsel for major unfair trade investigations. I look forward to working side by side with these talented and sophisticated attorneys, and their impressive clients.”

Wiley Rein’s International Trade Practice, recognized by a leading international directory as one of the country’s elite international trade practices, represents clients in domestic and international trade regulation matters, market access issues, and dispute resolution. Named an “International Trade Group of the Year” for seven consecutive years by Law360, the Trade Team has significant experience with the many issues shaping industries’ global competitive environment.

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Founded in 1983, Wiley Rein is a dominant presence in the nation’s capital. With 240 lawyers, the firm has earned international prominence by representing clients in complex, high-stakes regulatory, litigation, and transactional matters. Many of Wiley Rein’s lawyers and public policy advisors have held high-level positions in the White House and federal agencies and on Capitol Hill. The firm represents a wide range of clients—from Fortune 500 corporations to trade associations to individuals—in virtually all industries.

ITC begins digital trade investigations as AEI calls for removal of Chinese digital trade barriers

Posted in Trade Policy, World Trade Organization

The U.S. International Trade Commission (ITC) is beginning a comprehensive three-part investigation into digital trade and the impact of digital trade barriers, just as the American Enterprise Institute (AEI) has released a new study calling for a World Trade Organization (WTO) case to be filed against China’s barriers to digital trade and e-commerce.

The ITC investigations were announced earlier this week.  The first investigation will focus on market opportunities and key foreign trade restrictions.   The ITC will hold a public hearing on April 4, with requests to appear at the hearing due March 21.   Written submissions to the Commission are due April 21.   The schedule for the two subsequent investigations will be announced shortly.

AEI’s paper calls for action on China’s digital trade barriers.   The paper, authored by Claude Barfield, states that “China’s digital Great Firewall and the new National Security and Cybersecurity Laws threaten vital high-technology sectors of the US economy.”  AEI calls for a WTO case against China’s censorship practices, and also urges the Trump Administration and the U.S. Trade Representative to take trade retaliation against China if it fails to remove these damaging digital trade barriers.

According to AEI, the Internet sector now constitutes $966 billion, or nearly 6 percent of the U.S. economy.   However, China is blocking U.S. e-commerce while building its own competitors.  Currently, eight of the world’s 25 most trafficked websites are completely blocked in China – including those of Apple, Google, Facebook, Twitter, and YouTube.

The United States is not limited to WTO actions in this regard.   It can also use existing U.S. law, such as Section 301, to challenge illegal or unreasonable foreign trade practices that burden or restrict U.S. commerce.  Under Section 301, the President has the authority to impose tariffs or other restrictions after an investigation of the illegal foreign practices.

If the Trump Administration is looking for a way to hit China hard, remove illegal trade barriers, and strengthen the U.S. economy, it should not hesitate to challenge China’s Great Firewall.

Trump Administration Imposes Fresh Sanctions on Iran

Posted in Economic Sanctions

On February 3, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned more than two dozen individuals and entities related to Iran’s ballistic missile program and the Islamic Revolutionary Guard Corps – Qods Force (IRGC-QF).  The move comes amid escalating tensions between the Trump Administration and the Iranian government.

The new sanctions were triggered by Tehran’s ballistic missile test on January 29, 2017.  The sanctions target 25 individuals and entities, including Chinese firms suspected of supporting Iran’s missile program.  These entities and individuals include MKS International Co., Ltd., East Star Company, and Ofog Sabze Darya Company, as well as three China-based brokers involved in the procurement of dual-use technology and materials for Iran’s ballistic missile program.  The sanctions also target IRGC-QF’s Lebanon-based network working with Hezbollah, including Maher Trading and Construction Company, Reem Pharmaceutical, Mirage for Engineering and Trading, and Mirage for Waste Management and Environmental Services.  The property and interests in property of the designated individuals and entities are now blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

According to Administration officials, this action was taken outside the scope of the Joint Comprehensive Plan of Action (JCPOA), which was finalized in 2015 and is intended to restrict Iran’s nuclear activities in exchange for easing international sanctions against the country.  The JCPOA, and the earlier easing of the Iranian sanctions, remain in place.  However, the Trump Administration has indicated that the U.S. government is reviewing its overall policy towards Iran, suggesting that further changes to the sanctions regime could be forthcoming.

OFAC Amends Sudanese Sanction Regulations

Posted in Economic Sanctions, Export Controls

The Office of Foreign Asset Controls (OFAC) has announced that it is issuing a general license for activities prohibited by the Sudanese Sanctions Regulations.  Effectively, that will make the sanctions’ prohibitions inoperative going forward, even as the Sudanese Sanctions Regulations themselves remain in place.  OFAC’s new rules, which become effective today, authorize all transactions that were prohibited under the Sudanese Sanctions Regulations and Executive Orders 13067 and 13412, including the processing of transactions involving persons in Sudan, the importation and exportation of goods, services, and technology to Sudan, and transactions involving property in which the Government of Sudan has an interest.  Specifically, the amendment to the Sudanese Sanctions Regulations has the following effect:

  • All property and interest in property blocked under the Sudanese Sanction Regulations will be unblocked;
  • All trade between the United States and Sudan that was previously prohibited by the Sudanese Sanction Regulations will be authorized;
  • All transactions by U.S. persons relating to the petroleum or petrochemical industries in Sudan that were previously prohibited by the Sudanese Sanction Regulations will be authorized; and
  • The facilitation of transactions between Sudan and third countries by U.S. persons previously prohibited by the Sudanese Sanctions Regulations will be permitted.

The amendment affects only the Sudanese Sanctions Regulations, found at 31 C.F.R. Part 538, and does not affect obligations under any other provision of 31 C.F.R. or requirements established by any other agency. Continue Reading

USTR Files Landmark WTO Complaint, on Behalf of Wiley Rein Client, on China’s Subsidies to Aluminum Producers

Posted in Announcements, Antidumping, World Trade Organization

On behalf of Wiley Rein LLP’s client, Century Aluminum, United States Trade Representative Michael Froman today filed one of the largest and most complicated World Trade Organization (WTO) cases in recent years. The landmark case challenges China’s subsidization of its aluminum industry and seeks to remedy the injury the Chinese government’s policies are causing to the U.S. aluminum industry. For the first time, this case directly challenges the systemic distortions of China’s state-directed economy. Wiley Rein had a crucial role in developing this case over the past year, working in coordination with our SIGNAL Group subsidiary. The Wiley Ream team includes myself; partner Robert E. DeFrancesco, III; associates Laura El-Sabaawi and Adam M. Teslik; special counsel Ying Lin; and international trade analyst John W. Clayton, Jr.

Continue Reading

U.S. International Trade Commission Seeks Comments on Petitions for Import Duty Reductions

Posted in Customs Law, Manufacturing

Today, the U.S. International Trade Commission began accepting comments on the more than three thousand petitions filed with the agency last year requesting that the Government temporarily suspend import duties on products ranging from herbicidal chemicals to ping-pong tables.

Traditionally, duty reductions were obtained by having members of Congress sponsor individual bills on specific goods, which would then then packaged together in a combined “miscellaneous tariff bill.” However, after the last few attempts to put together such a bill failed due to concerns that the individual bills constituted earmarks, Congress passed the American Manufacturing Competitiveness Act of 2016, which passed the authority to receiving and vetting duty reduction proposals on to the Commission.

As in the past, an individual petition will only make it into the final proposed bill if the duty loss that would occur is less than $500,000/year. Further, proposals regarding goods manufactured in the United States are highly unlikely to make it through the petition process. Likewise, if a petition has been crafted to benefit a specific imported product to the disadvantage of identical or directly competitive imports, this may also weigh against the petition’s inclusion in the final bill.

Having collected petitions for duty reductions last year, the Commission is now seeking comments on the submitted petitions. Commenters may oppose, support, or provide neutral information with respect to specific petitions. Companies that believe that their U.S. production operations could be negatively affected by a petition may be particularly interested in filing comments in opposition. Similarly, importers of products that are like or directly competitive with the products subject to petitions may also be interested in filing opposition comments, while parties that stand to benefit from petitions may wish to supply information to round out the Commission’s understanding of the relevant industry or product.

Comments must be received by 5:15 p.m EST on February 24, 2017, and must be filed through the Commission’s online commenting system. A complete list of submitted petitions can be viewed here.

U.S. Trade Representative Notes China’s Lack of Progress on Overcapacity, State-Owned Enterprises

Posted in Trade Agreement Compliance, Trade Policy, World Trade Organization

In a new report on China’s compliance with its WTO obligations, the U.S. Trade Representative (USTR) highlights a number of shortcomings, including industrial overcapacity and the prominence of state-owned enterprises (SOEs).  The report emphasizes that “excess capacity in China . . . hurts U.S. industries and workers not only because of direct exports from China to the United States, but because lower global prices and a glut of supply make it difficult for even the most competitive producers to remain viable.”  The report highlights the Chinese government’s role in sustaining overcapacity in multiple industries, as well as its failure to address the problem despite commitments to do so:

  • “Chinese government actions and financial support in manufacturing industries like steel and aluminum have contributed to massive excess capacity in China, with the resulting overproduction distorting global markets and hurting U.S. producers and workers in both the United States and third-country markets such as Canada and Mexico . . . .”
  • “China has no comparative advantage with regard to the energy and raw material inputs that make up the majority of costs for steelmaking, yet China’s capacity has continued to grow and is estimated to have exceeded 1.16 billion metric tons in 2016 . . . .”
  • In the aluminum industry, “Large new facilities are being built with government support, including through energy subsidies, as China’s primary aluminum production accounted for 54 percent of global production from January through October 2016. As a consequence, China’s aluminum excess capacity is contributing to a severe decline in global aluminum prices, harming U.S. plants and workers.”

In another area of concern that is related to the overcapacity problem, USTR noted that a Chinese 2013 plan for SOE reform “has not yet led to significant reform of state-owned enterprises” and that “China has rebuffed U.S. requests” for “intensive dialogue with China on state-owned enterprise governance issues . . . .”

The complete 2016 Report on China’s WTO Compliance is available via USTR’s website, here.