Top Trade Developments
Latest Russia Sanctions/Export Highlights
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.
What Designating Russia As A State Sponsor of Terrorism Would Mean
According to recent reports, Ukrainian President Zelenskyy has directly requested that the United States designate Russia as a State Sponsor of Terrorism (“SST”), an action that the United States has been considering for some time. The designation would have far-reaching implications and would automatically trigger some of the most aggressive unilateral sanctions in the United States’ arsenal, including restrictions on financial transactions, defense exports and sales, and foreign aid. These would further ramp up pressure from even the existing slew of sanctions imposed on Russia and its oligarchs.
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U.S. Court of International Trade Rules USTR Violated APA When Imposing Sections 301 List 3 And List 4A Tariffs on Chinese Goods
On April 1, 2022, a three judge panel of the U.S. Court of International Trade (CIT) unanimously found that the Office of the United States Trade Representative’s (USTR’s) imposition of Section 301 List 3 and List 4A tariffs on Chinese products failed to comply with the Administrative Procedures Act (APA). Specifically, the court ruled that the USTR did not adequately respond to the public comments filed in response to the List 3 and List 4 tariffs – each covering $200 billion and $300 billion, respectively – per the APA.
The CIT rejected Plaintiff’s claims that the USTR did not have the statutory authority to issue List 3 and List 4A tariffs. The court stated that it found that the USTR exercised its authority consistent with sections 307(a)(1)(B) and (C) of the Trade Act when it issued the List 3 and List 4A tariffs.
With respect to the USTR’s violation of the APA, the court stated that the USTR “was required to address comments regarding any duties to be imposed, the aggregate level of trade subject to the proposed duties, and the products covered by the modifications, all in light of section 301’s statutory purpose to eliminate the burden on U.S. commerce from China’s unfair acts, policies, and practices and subject to the specific direction of the President, if any.” The court noted that the USTR’s statements failed “to apprise the court how the USTR came to its decision to act and the manner in which it chose to act.”
The CIT remanded the case to the USTR to further explain why it imposed List 3 and List 4A tariffs. This gives the USTR another limited opportunity to explain its imposition of tariffs. The CIT stated that “the USTR may only further explain the justifications it has given for the modifications…It may not identify reasons that were not previously given unless it wishes to ‘deal with the problem afresh’ by taking new agency action.” The court explained that the USTR’s failure to comply with the APA “leaves rooms for doubt as to the legality of its chosen course of action.” Nonetheless, the court decided that it would not vacate the Section 301 List 3 and List 4A tariffs. The CIT found that vacatur would significantly disrupt the ongoing negotiations and declined “for now. . . to try to unscramble this egg.”
The USTR must file its remand results by or before June 30. Afterwards, within 14 days of the USTR’s filing, the parties will file a joint status report and the court will issue a new briefing schedule. There also may be another oral argument before the CIT issues its final decision. The CIT’s final decision will likely be appealed to the Court of Appeals for the Federal Circuit.
The CIT’s opinion and order can be found here.
For more information on actions regarding Section 301 tariffs as well as the Court of International Trade, contact our team below.
Global Mobility and Workforce Concerns During the Ukraine/Russia Conflict
Employers continue to face the impact of the current Ukraine/Russia conflict on employees and the employment relationship in Russia, Ukraine and the broader region. This article will touch upon briefly some key issues of concern for multinationals during this time.
The number one concern for employers must be the safety and wellbeing of employees. Employers must be able to keep options open and flexible, and adjust by establishing a remote work arrangement if it is possible to do so, shifting schedules, relocating and reassigning employees, and making contingency plans for suspensions or redundancies as needed. Safety is not just physical; it is mental and emotional, with long term impacts. Employers will need to continue to keep apprised of the current developments and adjust to employee needs, be it sharing resources, providing accommodations, financial support or charitable contacts; communication and compassion are essential in helping employees during this difficult period.
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CBP Announces Issuance Of “Known Importer Letters” To Previous Importers of Goods Subject to Uyghur Forced Labor Prevention Act
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.
Global Data Transfer Developments: Taking the APEC System Global
On April 21, Canada, Singapore, Japan, the U.S., the Republic of Korea, Chinese Taipei, and the Philippines released a joint declaration announcing the creation of a Global Cross-Border Privacy Rules (CBPR) Forum. This global CBPR Forum, which is drawn from the Asia-Pacific Economic Cooperation (APEC) forum’s existing CBPR and Privacy Recognition for Processors (PRP) Systems, will allow for the expansion of the CBPR system beyond APEC’s twenty-one economies into a truly international framework.
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