On 14 December 2022, the Council of the EU (“Council”) and the European Parliament (“Parliament”) adopted Regulation (EU) 2022/2560 of the European Parliament and of the Council on foreign subsidies distorting the internal market (the “Foreign Subsidies Regulation” or “FSR”), which was published in the EU’s Official Journal on 23 December 2022. The FSR gives the European Commission (“Commission”) substantial new powers to investigate “financial contributions” granted by non-EU governments to companies operating in the EU and, where necessary, take measures to redress their distortive effects. Specifically, the Commission will be able to conduct such investigations through three new tools: two notification-based tools to investigate concentrations and bids in public procurements above certain thresholds and a general tool to investigate all other market situations and lower-value mergers and public procurement procedures.Continue Reading The EU’s Foreign Subsidies Regulation Gets Adopted
On November 18, 2022, the Department of Commerce (“the Department”) published a notice of advanced proposed rulemaking seeking public comments with respect to its methodology in determining the existence of a particular market situation (“PMS”) that distorts the cost of production in the ordinary course of trade in the context of its antidumping duty (“AD”) proceedings. This PMS provision was added to Section 773(e) of the Tariff Act of 1930, as amended, through the Trade Preferences Extension Act in 2015. As a result of several adverse court decisions since the passage of this amendment, the Department intends to reconsider its approach to determining the existence of a PMS, and to issue a new regulation to identify the types of information that should be considered when determining whether a PMS distorting the cost of production exists. Comments are due no later than December 18, 2022.Continue Reading The Department of Commerce Seeks Comment on Its “Particular Market Situation” Practice
Last week, the U.S. Department of Commerce (“DOC”) concluded that the Russian Federation will be considered a non-market economy (“NME”) for future antidumping duty (“AD”) proceedings. This decision reversed the DOC’s 2002 conclusion that Russia was a market economy country, a conclusion that had been reaffirmed by the DOC as recently as 2021. This decision could have significant consequences for companies importing products from Russia subject to AD orders as, generally speaking, the use of the NME methodology results in higher AD margins. As a result, companies involved in certain industries, particularly in the steel, fertilizer and chemical sectors, could feel an impact from this decision after it begins to take effect.Continue Reading U.S. Commerce Department Concludes Russia Is a Non-Market Economy for Antidumping Proceedings
The United States, the European Union, and the United Kingdom are increasingly using trade policy tools as a means to promote certain sustainability goals related to human rights and the environment. For instance, Steptoe covered in a previous post the trade restrictions proposed at the end of 2021 aimed at illegally deforested products. More recently, amidst increasing concerns regarding forced labor in certain regions, the EU has proposed legislation which would ban making available within the EU, and exporting from the EU, products made with forced labor – resembling, to some extent, the forced labor ban that is in place in the US. Meanwhile, the UK has adopted a more piecemeal and geographically targeted approach through the adaptation of existing legislation focused on export controls and the prevention of modern slavery.Continue Reading Measures Banning Products Made with Forced Labor: US, EU and UK Approach
On September 19, 2022, the European Commission (“Commission”) presented the Single Market Emergency Instrument (“SMEI”), a crisis management framework designed to secure supply chains of “identified, strategically important goods and services” within the European Union (“EU”) during times of emergency. The SMEI was introduced as a response to the significant structural issues in the EU’s supply chain of critical goods and services, which were highlighted by the COVID-19 pandemic. Comments on the Proposed Regulation are currently due on December 17, 2022.Continue Reading The EU Single Market Emergency Instrument: Comparing the SMEI Against the U.S. Defense Production Act
On October 12, 2022, the Office of the U.S. Trade Representative announced it would be seeking public comments regarding the effectiveness of the actions related to the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. The two specific actions under review are the imposition of additional tariffs under Section 301 on products on List 1 and List 2 (covering $34 billion and $16 million in imports as of 2018, respectively), which were subsequently modified by the imposition of List 3 and List 4A (totaling $325 billion in imports as of 2018). This notice marks the next step in the USTR’s “review of necessity,” a statutory-mandated four-year review process. A portal for submitting these comments will open on November 15, 2022, with a deadline of January 17, 2023. Continue Reading USTR Announces Next Steps in Statutory Four-Year Review of China 301 Tariffs
On September 24, 2022, the Office of the United States Trade Representative (USTR) announced the successful resolution of a labor complaint brought under the Rapid Response Labor Mechanism (RRM) of the United States-Mexico-Canada Agreement (USMCA). This case marked the fifth time that the RRM has been invoked since its inception in 2020. The RRM represents the most tangible aspect of the Biden Administration’s worker-centric trade policy. As the number of these cases goes up, companies with production activities in Mexico–and particularly those in the automotive sector–should be mindful of their commitment to their workers’ labor rights. Continue Reading The USMCA’s Rapid Response Labor Mechanism: An Increasingly Important Component of the Biden Administration’s “Worker-Centric” Trade Policy
Since the beginning of the Biden Administration, and particularly since earlier in 2021, U.S. companies and importers have been looking forward to the prospect of a reduction in the tariffs originally imposed in 2018 and 2019 following the Section 301 investigation against China or, at a minimum, a resumption of the exclusion process that was largely suspended in 2020 aside from extensions in limited circumstances. While several avenues for the elimination or reduction of Section 301 duties have presented themselves, to date, none have been adopted. Nevertheless, the coming months may offer several opportunities for U.S. companies interested in reducing their Section 301 duty liability to advocate for relief. Continue Reading Section 301 Duties on Imports from China: Current Status of Prospects for Relief
The much anticipated proposal for a Regulation prohibiting products made with forced labor on the EU market was published by the European Commission (“Commission”) on 14 September 2022, one year after the initiative was first announced by Commission President Ursula von der Leyen in her 2021 State of the Union speech. The proposed forced labor instrument has the potential to significantly impact the supply chains of not only EU companies, but also of any non-EU company that sells products into the EU. The instrument would apply to any company that exports products from the EU or that sells products on the EU market, irrespective of where those companies are based, to which products they are selling, and to which countries and suppliers they source from. Continue Reading The Proposed EU Ban on Goods Made With Forced Labor
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently released preliminary guidance on the implementation of a price cap policy on Russian crude oil and petroleum products. This policy has major implications for maritime service providers and maritime supply chains.
The price cap policy will be implemented by the United States, together with the G7 and the EU. The policy has two components: (1) a ban on services related to the maritime transportation of Russian origin crude oil (effective December 5, 2022) and petroleum products (effective February 5, 2022) (collectively referred to as “seaborne Russian oil”), and (2) an exception for services related to shipments of seaborne Russian oil purchased at or below a price cap. The U.S. ban on the importation of Russian crude oil, petroleum, and petroleum fuels, oils and products of their distillation into the United States will remain in place.
The level of the price cap has not yet been set. It will be established by cooperating countries via a consultative process. OFAC anticipates publishing additional, detailed guidance regarding the price cap plan closer to the implementation dates. Continue Reading OFAC Releases Preliminary Guidance on Implementation of the Russian Oil Price Cap