The European Union (EU) currently has in place a safeguard order against 26 product categories of steel. The EU first adopted a provisional measure in July 2018 and a definitive one in January 2019, the latter having been amended several times. The EU measure places an additional tariff (of 25%) upon the listed steel products where imports exceed a quota (with some country-specific quotas, and other general quotas applicable to other countries). The measure was adopted, in essence, because the European Commission determined that there had been an increase of imports into the EU, caused by unforeseen developments, including the increased use of trade defense instruments globally and in particular the US Section 232 measure of March 2018. The latter measure diverted steel exports to the EU and which threatened to cause injury to the EU steel industry.

Under the Withdrawal Agreement between the EU and the UK, EU safeguard measures currently apply to the UK and will do so until the conclusion of the transition period for the UK’s withdrawal from the EU on 31 December 2020. The UK Government currently has to decide whether to transition existing EU trade remedy measure to equivalent UK measures on 1 January 2021. In the case of the steel safeguard measure, the Government issued a Notice of Determination on 30 September 2020 to transition 19 of the 26 products, with adjustments being made to the level of the quotas for each product category. The EU for its part is in the process of amending its tariff rate quotas in light of the end of the transition period and the UK’s exit from the umbrella of the EU’s safeguard measure.

Continue Reading The United Kingdom (UK) Steel Safeguard Transition

In today’s MLex, Steptoe Senior Counselor and former EU Ambassador to the United States David O’Sullivan provided some thoughts on how to make progress on U.S.-EU agricultural issues to repair the bilateral trade relationship.

Ditch food-safety hangups to get trade deal with Biden, former EU ambassador to US says

19 Nov 20 | 17:45 GMT
Author: Joanna Sopinska

In Brief
The EU should be ready to offer some concessions on agriculture to US President-elect Joe Biden to de-escalate trade tensions and rebuild the trans-Atlantic relationship, a former EU ambassador to the US has said. This would require EU countries to put aside “all the old” disagreements on “chlorinated chicken, hormone beef and GMOs” and look instead for “things where there could be a bit of movement on both sides,” David O’Sullivan said.

Continue Reading Overcoming Obstacles to US-EU Agricultural Trade

On 23 October 2020, the Japan-UK Comprehensive Economic Partnership Agreement (JUK Agreement) was signed in Tokyo by Japan’s Foreign Minister Toshimitsu Motegi and UK International Trade Secretary Liz Truss. This is the first new international trade agreement the UK has concluded with a major economy since officially leaving the European Union (EU) in January 2020.

The UK-Japan negotiations were conducted with remarkable speed. There was enormous pressure from business leaders on both sides to have a deal in place before the end of the so-called “Withdrawal Agreement” period on 31 December 2020, i.e. the period following the UK’s formal departure from the EU, during which the UK has continued to be treated as an EU Member State (including continued coverage under existing EU trade agreements). The EU had concluded a comprehensive free trade agreement with Japan in 2018 which entered into force in February 2019 (the Japan-EU Economic Partnership Agreement (Japan-EU EPA)). Both the UK and Japan were keen to at least replicate its terms in a UK-Japan deal by late 2020, to ensure continuity. Time therefore was of the essence. On 9 June this year, Ms. Truss and Mr. Motegi met by videoconference and affirmed each other’s intention to engage in formal negotiations. On 7 August, they met again in person, this time in London, to confirm further intensification of the negotiations. Just over three months after launch of formal negotiations, on 11 September, the JUK Agreement was agreed in principle.

Continue Reading The Japan-UK Comprehensive Economic Partnership Agreement: EU Wine in UK Bottles?

On October 19, 2020, Brazil and the United States announced the signing of a Protocol on Trade Rules and Transparency (Protocol). The Protocol updates the 2011 Agreement on Trade and Economic Cooperation (ATEC) between the two countries with new annexes in three areas: Trade Facilitation and Customs Administration, Good Regulatory Practices, and Anti-Corruption. The agreement represents the culmination of a long process. In 2016, former Brazilian president Michel Temer signaled interest in receiving additional investment from the United States. This outreach intensified the dialogue between the two countries, and the discussions gained momentum until the elections of Donald Trump in 2016 and Jair Bolsonaro in 2018. After a meeting between the presidents at Mar-a-Lago in March 2020, there were high hopes in the business community for the negotiation of an ambitious trade deal between the two largest economies in the hemisphere.

The revised Protocol, however, is not a comprehensive trade agreement. The agreement does not include tariff reductions, measures designed to promote cooperation in strategic sectors, such as energy or infrastructure, or disciplines on express shipments. Moreover, the Protocol does not address agriculture, nor does it cover digital trade issues, such as Brazil’s plan to impose a tax on electronic commerce, which has proven to be a flashpoint between the US and a number of its trading partners.

Nevertheless, the Protocol does contain important provisions – primarily based on the relevant chapters of USMCA — that could help facilitate trade between the US and Brazil in the medium and long term:

  • Trade Facilitation and Customs Administration: the Annex includes important provisions on advance rulings, penalties, single window, authorized economic operator, automation, and the use of electronic documentation in line with the parties’ obligations in the WTO Trade Facilitation Agreement.
  • Good Regulatory Practices: the Annex addresses the importance of internal coordination and transparency in regulatory development, regulatory impact assessment, information quality, regulatory agendas, retrospective review of existing regulations, and other internationally-recognized GRPs.
  • Anti-Corruption: the Annex contains provisions addressing money laundering, the recovery of proceeds of corruption, the denial of a safe haven for foreign public officials that engage in corruption, and additional protections for whistleblowers. For Brazil, including strong anticorruption provisions supports President Bolsonaro’s flagship project against corruption that has been criticized with the shutdown of Operation Car Wash.

Although bilateral discussions toward a comprehensive trade agreement appear highly unlikely in the short- or medium-term due to strong congressional opposition, the Protocol could have a positive impact on bilateral trade flows over time – if it is faithfully implemented. Issues encountered by businesses in the three areas covered by the Protocol can create barriers to trade that, in many cases, are more substantial with regard to market access from a cost perspective than tariffs. For this reason, stakeholders should take advantage of opportunities for formal and informal engagement during the implementation process (e.g., some provisions have transition periods) to shape emerging laws and policies and help ensure that the commitments are met, which will reduce the incidence of trade barriers and other bilateral irritants in the long-term.

It is worth noting that the Administration’s mini-trade deals, including the recent ones with Japan and Brazil, have raised significant concerns from leading Democrats in Congress about executive branch circumvention of the congressional role in trade negotiations. As a result, Congress is likely to demand significantly more oversight of USTR as the price for any subsequent TPA legislation after the TPA Act expires next year.

With the results of the US presidential election now clear, many in Washington and around the world are beginning to contemplate what international trade policy might look like after President Elect Joseph R. Biden, Jr. takes office in January 2021. Predicting that policy is difficult, since international trade issues did not take center stage during the presidential campaign. However, statements the President Elect made during the campaign, prevailing sentiments in Congress, and Biden’s reputation as a believer in multilateral institutions developed during his nearly five decades in public office, offer some clues as to the broad outlines of his international trade policy. Overall, we expect that the Biden Administration will signal more predictability and a more rules-based multilateral orientation for US international trade policy than its predecessor. At the same time, it will be difficult to unwind some Trump Administration trade policies that enjoy political support, and in certain areas, we are likely to see significant policy continuity in the short- to medium-term.

Continue Reading Client Advisory: The US Trade Agenda in the Biden Administration

In early October, the European Commission launched “Access2Markets”, a web-based portal designed to provide practical information, tips and guidance to companies involved in import and export activities relating to the European Union (EU). This new online portal is set up in response to requests from stakeholders, in particular small and medium enterprises, for simplified and free access to guidance about customs and regulatory conditions for goods entering the EU from third countries, and about the equivalent conditions in third countries for goods originating from the EU.

The Access2Markets portal offers a single information point for useful information relevant to trading activities. It groups together information and guidance previously scattered in separate databases and tools, such as the Market Access Database, Trade Helpdesk, TARIC – EU Customs Tariff, and List rules concerning non-preferential origin. It also simplifies the complex set of EU-relevant import and export rules set out in the network of trade agreements the EU has entered into with over 70 countries and regions over the past 40 years. The new data pool covers a full spectrum of international trade-related topics encompassing information about tariffs (including both nomenclature and explanatory notes used for classification), applicable taxes at both the national and regional levels, rules of preferential and non-preferential origin, product requirements (e.g., labelling and marking), customs procedures and formalities, VAT/excise duties/sales taxes, non-tariff trade barriers in third countries, and trade statistics by individual good and country. Continue Reading The EC Launches an Online Tool to Facilitate an Understanding of International Trade Rules

In a rare weekend action, the US Court of International Trade (CIT) issued on Saturday a temporary restraining order that prevented a recent presidential proclamation from re-imposing Section 201 tariffs on bifacial solar panels.

In 2018, President Trump imposed tariffs on imports of solar cells and modules pursuant to Section 201 of the Trade Act of 1974. This statute allows the president to provide temporary import relief on goods that seriously injure or threaten to seriously injure a competing domestic industry. Such measures are referred to as “safeguard actions.” Here, President Trump imposed a four-year tariff which was initially set at 30%, and which was set to decrease by 5% each year. The US Trade Representative (USTR) was also instructed to develop a process which allowed companies to request exclusions from these tariffs. During this process, USTR granted an exclusion for bifacial solar panels – panels that produce solar power from both sides of the module. However, USTR subsequently rescinded this exclusion. This reversal was challenged at the CIT, and in December 2019, the court issued a preliminary injunction barring USTR from withdrawing the exclusion while the case is pending.

President Trump then issued a proclamation earlier this month, ordering that tariffs be re-imposed on bifacial solar panels on October 25, 2020. The proclamation also increases the duty rate for the fourth year of the tariffs from 15% to 18% which takes effect on February 7, 2021. Unsurprisingly, plaintiffs in the action challenging USTR’s rescission of the bifacial solar exclusion expanded their lawsuit to encompass the aspect of the proclamation that revokes the exclusion for bifacial solar panels. The CIT granted their request for a temporary restraining order while it decides whether it is appropriate to issue a preliminary injunction. As a result, bifacial solar panels will continue to be excluded from Section 201 tariffs for now. The increase in the fourth-year tariff rate is also being challenged in this litigation.

The Office of the United States Trade Representative (USTR) has initiated investigations on two trade-related issues with respect to Vietnam under Section 301 of the Trade Act of 1974 (Section 301). The investigations, which were announced on October 2, 2020, will cover Vietnam’s acts, policies, and practices related to (1) the import and use of timber that is illegally harvested or traded, and (2) the undervaluation of its currency, and the resulting harm to US commerce.

The initiation notice concerning Vietnam’s allegedly illegal timber practices cited Vietnam’s position as “one of the world’s largest exporters of wood products, including to the United States” and evidence that “much of the timber imported by Vietnam was harvested against the laws of the source country.” The source countries specifically identified in the notice were Cambodia and the Democratic Republic of the Congo (DRC). The investigation will focus on whether Vietnamese imports of illegal timber are inconsistent with Vietnam’s domestic laws, the laws of the exporting countries, or international rules and whether Vietnam tacitly supports the import and use of illegal timber. Comments on these and other topics, including what, if any action should be taken by the US Government, may be submitted electronically (Docket No. USTR–2020–0036) by November 12, 2020. USTR will not be holding a public hearing with respect to this investigation.

The initiation notice concerning Vietnam’s acts, policies, and practices related to the undervaluation of its currency cited available information suggesting that Vietnam’s currency (the Dong) has been undervalued for at least the past three years. USTR is seeking comments on whether and the extent to which Vietnam’s currency is undervalued; Vietnam’s policies that contribute to the undervaluation of its currency and whether they are unreasonable or discriminatory; whether US commerce has been burdened or restricted by the undervaluation of Vietnam’s currency; and what, if any action should be taken by the US Government. Comments may be submitted electronically (Docket No. USTR–2020–0037) by November 12, 2020. USTR will not be holding a public hearing with respect to this investigation.

The initiation of these investigations by USTR reflects the Trump Administration’s continued use of Section 301 to address allegedly unfair trade practices by US trading partners. Since 2017, the Trump Administration has relied on Section 301 to investigate measures ranging from China’s technology and intellectual property policies to the promulgation of digital services taxes by a number of countries. If USTR concludes that Vietnam’s policies are unreasonable or discriminatory, and burden or restrict US commerce, the President will be empowered to take remedial action, including, potentially, the imposition of tariffs and/or other restrictions on imports of Vietnamese goods and services. Accordingly, companies that import merchandise form Vietnam – and especially companies that import wood products (e.g., lumber, furniture, etc.) – should consider submitting comments, or at a minimum, monitoring this proceeding closely.