The members of the Indo-Pacific Economic Framework (IPEF) reached a significant milestone at the IPEF Ministerial Meeting in Detroit, Michigan with the substantial conclusion of negotiations on a landmark Supply Chain Agreement. This agreement, involving all 14 IPEF member countries, is aimed at fortifying the resilience, efficiency, and inclusivity of their supply chains through a combination of collaborative activities and individual actions. The agreement lays the foundation for improving supply chain resilience and transparency, as well as enhancing public-private cooperation and business certainty in and among IPEF member states – particularly in sectors deemed “critical” by member governments. Continue Reading Unveiling the Landmark IPEF Supply Chain Agreement

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  

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

The Uyghur Forced Labor Prevention Act (UFLPA) supports the existing prohibition on the importation of goods into the United States made with forced labor under Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307).  Enforcement of the UFLPA began on June 21, 2022.  Companies with supply chains that have links to Xinjiang specifically and China more generally should be concerned about the implications of UFLPA enforcement.

The UFLPA requires U.S. Customs and Border Protection (CBP) to apply a presumption that imports of all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China (Xinjiang), or by entities on the UFLPA Entity List (described below), are prohibited from entry into the United States under 19 U.S.C. § 1307.  The scope of the UFLPA extends to goods made outside of or shipped through China that include inputs made wholly or in part in Xinjiang.  There is no de minimis exception.  Priority enforcement areas include polysilicon, cotton, and tomatoes.Continue Reading Uyghur Forced Labor Prevention Act, Part II: Enforcement

We are likely witnessing the beginning of the largest disruption to global supply chains in the post-World War II era.  Between the COVID pandemic, the ongoing U.S.-China trade war, severe weather events, cyber attacks, and now the Russian invasion of Ukraine, policymakers around the world are starting to understand that supply chain disruption is the new normal and beginning to prioritize supply chain security and resilience during what is expected to be a period of long-term international instability.

While it is difficult to predict how long Russia’s war against Ukraine will last, many commentators believe that war may be long and protracted.  As long as the conflict lasts, we would expect more sanctions and other measures to be promulgated.  This will prompt supply chain realignments, including greater decoupling from the Russian economy. These measures will start as temporary but could become long-term or even permanent.

In addition, China’s de facto alliance with Russia since the start of the war will likely provide additional momentum for de-coupling with China as well, including the development of regional and plurilateral approaches to onshoring/reshoring and “friend-shoring” supply chains.  These shifts of alignments will have major consequences for the production and movement of goods, ranging from automobiles, semiconductors, and oil and gas, to food and agricultural commodities. Global companies will increasingly be faced with choosing between abiding by Western sanctions and export controls or Chinese and Russian law.Continue Reading Impacts of Russia’s Invasion of Ukraine on Global Supply Chains, Part I

On April 18, 2022, the Office of Management and Budget (OMB) published new guidance related to the implementation of the Build America, Buy America (BABA) provisions in the Infrastructure Investment and Jobs Act (IIJA). The BABA provisions, which passed in November 2021, require that any infrastructure projects receiving federal assistance – not only those infrastructure projects funded by the IIJA – must use iron, steel, manufactured products, and construction materials that are produced in the US. The new guidance describes how federal executive departments and agencies should implement the “Buy America” preference for federally-financed infrastructure projects and a “transparent process to waive”  the preference, when necessary.  Although the OMB guidance reflects an “initial” approach to implementation, and additional guidance may follow, there are several important takeaways for companies interested in pursuing or currently performing federally-funded infrastructure projects.
Continue Reading New “Buy America” Guidance for Infrastructure Projects Released

On December 23, 2021, and following strong bipartisan support in Congress, President Biden signed the Uyghur Forced Labor Prevention Act (“UFLPA” or “Act”) into law.  P.L. 117-78 (2021).  The UFLPA builds on previous congressional and executive branch actions aimed at responding to allegations of forced labor and other human rights concerns in China’s Xinjiang Uyghur Autonomous Region (“XUAR”).  In particular, the UFLPA introduces a rebuttal presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in” the XUAR were made with forced labor and are therefore ineligible for entry into the United States.  In addition, the UFLPA details Congressional expectations for a whole of government enforcement strategy with respect to allegations of XUAR-related forced labor and expands economic sanctions introduced under the Uyghur Human Rights Policy Act of 2020 to cover “{s}erious human rights abuses in connection with forced labor” in the XUAR.

In recognition of the compliance challenges related to the above-described rebuttable presumption, the Forced Labor Enforcement Task Force (“FLETF”) is soliciting comments on how best to ensure that “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China are not imported into the United States.”  These comments are due no later than March 10, 2022.  As discussed further below, importers should consider submitting comments to the FLETF concerning this set of issues, which will ultimately inform the enforcement strategy employed by U.S. Customs and Border Protection (“CBP”) at the border.  Additionally, importers should begin top-to-bottom reviews of their supply chains to ensure compliance with the newly-introduced rebuttable presumption prior to its implementation in June of this year.Continue Reading Understanding the Uyghur Forced Labor Prevention Act and What Comes Next

In the last quarter of 2021, the United States, the European Union, and the United Kingdom introduced or adopted measures aimed at eliminating illegal deforestation throughout the world.  All three measures recognize the harmful effects of deforestation with regard to climate change and seek to address such effects by prohibiting certain commodities produced on (illegally) deforested land from being placed on their respective markets.  However, there are significant differences among the measures that warrant closer examination as they could have market access implications for companies.

This article sets out the key similarities and differences across the US, EU, and UK anti-deforestation measures, building on Steptoe’s previous posts on the proposed Fostering Overseas Rule of Law and Environmentally Sound Trade Act of 2021 (“FOREST Act”) in the United States, the European Union’s Proposal for a Regulation on Deforestation-free Products (“Proposed Regulation”), and the United Kingdom’s Environment Act 2021 (“Environment Act”).  A more comprehensive analysis of each measure can be found here: US, EU, UK.Continue Reading Comparing Recent Deforestation Measures of the United States, European Union, and United Kingdom