Following the invasion of Ukraine, the United States government has imposed numerous economic sanctions and export controls affecting trade with Russia.  In order to stay up to date on all sanctions-related matters, visit Steptoe’s “Sanctions Against Russia: Implications for Business and International Trade” resource page.

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It is generally known that EU anti-dumping and anti-subsidy measures are usually imposed for a period of five years, and that they can be (and usually are) extended for further five-year periods further to expiry review investigations. Similarly, operators facing trade defense measures will typically be aware that the repeal or the reduction of the duties can be obtained with interim review investigations or duty refund procedures. It is instead far less known that there is another, temporary, and, until very recently, long unexploited solution available to EU importers and end-users to ease the pressure of EU trade defense measures, namely the suspension thereof. This tool can be particularly relevant to EU importers and end-users of goods that are currently suffering from supply chain disruptions.

Continue Reading Duty Suspension: An Interim Relief from EU Trade Defense Measures

On February 10, 2022, the Department of Commerce (“the Department”) published a Federal Register notice requesting public comments on the process for seeking exclusions from the Section 232 steel and aluminum tariffs.  Comments are due on March 28, 2022.

The Department is soliciting comments with regard to two areas in particular.  First, as directed by the recent Presidential Proclamation regarding the U.S.-EU steel deal, the Department has requested feedback regarding the responsiveness of the exclusion process to “market demand and enhanced consultation with U.S. firms and labor organizations.”  Second, the Department noted that it would also be open to receiving comments on specific aspects of the Section 232 exclusion process, including potential changes regarding the information being requested, how the process proceeds, the standard of review, General Approved Exclusions (“GAEs”), and the transparency of the system.  The notice lists the following issues and possible changes as areas for comment as well:

  • How to reduce the volume of submission errors and rejected filings in the Section 232 Exclusions Portal
  • How to address the time for processing of exclusion requests, including but not limited to reducing length or type of attachments
  • Requiring public summaries of any confidential business information in exclusion requests and objections, similar to the existing requirement for rebuttal and surrebuttals
  • Requiring public disclosure of delivery times on the Exclusion Request and Objection Forms
  • Requiring recent (i.e., from the last quarter or 90 days) evidence supporting claims made in a Request or Objection
  • Streamlining the online forms or otherwise reducing administrative burden; and
  • Assessing the GAEs criteria and identification of specific products

For companies that have been using the Section 232 exclusion process, this is an excellent opportunity to raise any issues or problems that have been encountered.  In addition, although not mentioned in the request, this could also be an opportunity for companies to comment on the extended exclusions that were issued as part of the U.S.-EU agreement, since the Department did not provide the public any opportunity to address how it intended to manage that process.

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

On February 8, 2022, Auxin Solar Inc. (“Auxin”) filed a request that the U.S. Department of Commerce (“the Department”) determine whether the antidumping duty and countervailing duty (“AD/CVD”) orders on crystalline silicon photovoltaic (“CSPV”) cells and modules, i.e., solar cells and panels, from China are being circumvented.  Auxin alleges that certain Chinese CSPV producers are circumventing these AD/CVD orders by performing most of the manufacturing for CSPV cells and modules in China, and then completing them in Southeast Asia.  These allegations are similar to those in a petition that was filed in September 2021 by a coalition called the American Solar Manufacturers Against Chinese Circumvention (“A-SMACC”).  The Department ultimately rejected A-SMACC’s request because the coalition refused to disclose the names of its members publicly.

Although Auxin’s request is similar to the prior petition in many respects, there are a couple key differences.  Auxin has alleged that circumvention is occurring in Cambodia, Malaysia, Vietnam, and Thailand; the prior request did not include Cambodia.  More importantly, A-SMACC only asked for anticircumvention inquiries into certain companies, whereas Auxin is requesting that the Department conduct a country-wide circumvention inquiry into each of the four subject countries.  If the Department agrees, this may mean that all imports of CPSV cells and modules from these four countries will be presumed to be subject to the China CSPV AD/CVD orders. Normally, when the Department imposes such a presumption, it will also design a certification process that will allow U.S. importers to demonstrate that merchandise coming into the U.S. is not circumventing the order, and thus not subject to AD/CVD duties.

The Department will have until March 10, 2022 to decide whether or not to initiate a circumvention inquiry.  It can extend this deadline by 15 days if necessary.  If an inquiry is initiated, under new regulations that were issued last year, the Department must issue its final determination within a year from the date of initiation.

In 2021, the United Kingdom (UK) exited the EU’s legal regime to become an independent entity for trade purposes – given this, the year witnessed the operation of the Trade and Cooperation Agreement (TCA) which governs the relationship between the UK and the European Union (EU), the negotiation of at least two other free trade agreements (FTAs) ( the UK-Australia FTA and the UK-New Zealand FTA), an application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) along with the establishment of the Trade Remedies Authority (TRA) and the issuance of its first decisions.  The present note summarises these key developments (and more) in UK trade over the past year.

Continue Reading UK Trade: A Summary of Developments in 2021

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

2021 was an eventful year for international trade law and policy in the EU, with developments in several key areas.

The EU strengthens its trade policy toolbox

In the light of the recent ongoing problems with multilateralism and the continuing rise of China, the EU focused hard on strengthening its trade enforcement toolbox in a wide variety of trade related areas. This includes the use of recent tools and proposals for new instruments:

  • The Amended Trade Enforcement Regulation entered into force on 13 February 2021. This greatly expands the EU’s capacity to adopt trade countermeasures against third countries. It can now do so even before dispute settlement proceedings at the WTO or under other international agreements have been concluded if these are blocked by the other party. This would include, for instance, situations where a trading partner appeals an adverse panel report “into the void” to the non-functioning Appellate Body at the WTO, as well as in relation to a broader range of violations. The Commission is due to undertake a review of the Trade Enforcement Regulation, to consider additional commercial policy measures in the field of trade-related aspects of intellectual property rights, by 13 February 2022.
  • The FDI Screening Regulation, which has been in force since the end of 2020, has led to a growing number of FDI mechanisms notified or updated by Member States to the European Commission throughout 2021 (see here). For the EU, which did not have a role in FDI screening prior to this, this mechanism is starting to become a game-changer. In November 2021, the Commission published its first annual report on the screening of foreign direct investments into the EU. Of the 265 cases notified to the Commission between 11 October 2020 and 30 June 2021, 80% were closed by the Commission in Phase 1, whereas 14% of cases proceeded to Phase 2, with additional information being requested from the notifying Member State (the remaining 6% were still under assessment on 30 June 2021). The Commission issued an opinion, with recommended measures, in less than 3% of the notified cases. Actual prohibitions of investments by Member States appear to be limited for the moment, although there have been such instances (like Italy’s prohibition of the proposed acquisition of control in LPE, an Italian semiconductor equipment company, by a Chinese company). Moreover, parties sometimes abandon envisaged transactions prior to a formal prohibition. The imposition of conditions appears more common.
  • On 5 May 2021, the Commission published its proposal for a new Regulation to address distortions by foreign subsidies. The Regulation introduces three new instruments that would give the Commission the power to investigate foreign subsidies granted to companies active in the EU and identify whether they are causing distortions in the EU single market. Should the Commission identify distortive foreign subsidies, it could impose redressive measures to counteract their effects (see our blog post describing the Commission’s proposal here). If adopted, which currently appears likely, it would give the Commission far-reaching new powers. The Committee on International Trade, the leading committee in charge of the file within the European Parliament, has released its draft report on the proposal on 17 December 2021, generally supporting the new instruments and suggesting additional protections against home-market monopoly advantages and known future subsidies.
  • On 8 December 2021, the Commission published a proposal for a new anti-coercion instrument. The aim of this instrument would be to deter and, if necessary, retaliate against third countries exerting economic coercion against the EU or its Member States in order to influence their political decisions and policy choices (see our blog post describing the Commission’s proposal here). This is another example of a novel instrument in the field of trade that would grant the Commission with robust powers to address trade policy issues.
  • Negotiations on a proposed new International Procurement Instrument have also progressed in 2021. This instrument would enable the EU to limit, on a case-by-case basis, access to its public procurement market by companies from third countries which restrict access to their own procurement markets by EU businesses. This would represent a significant overhaul of the EU’s current public procurement system, which is currently one of the more open ones globally.

Continue Reading EU Trade: 2021 Takeaways, 2022 and Beyond – What to Expect

2022 is shaping up to be a critical year for the Biden Administration regarding U.S. international trade policy.  In 2021, the Biden Administration made headway in resolving some of the challenges with United States’ allies that arose during the last Administration, and trying to build bridges in important regions that had perhaps had been neglected.  But in a number of other critical areas, and arguably in the most significant areas, the Biden Administration made little tangible progress over the past year.  The discussion below offers a look back at the key developments in 2021 with respect to U.S. trade relations with the EU, China, the rest of Asia and North America, and a look ahead at what could come in 2022.

Continue Reading The US International Trade Agenda: A Look Back, A Look Ahead

This is the fourth post in a series regarding the Department of Commerce’s revisions to antidumping/countervailing duty regulations.  Prior blog posts in this series can be found here, here, and here.

On September 20, 2021, the U.S. Department of Commerce (“DOC”) published a Final Rule, promulgating new regulations which govern inquiries regarding the circumvention of antidumping and countervailing duty (“AD/CVD”) orders.  These new regulations govern any circumvention inquiries for which a circumvention request is filed, as well as any circumvention inquiry self-initiated by DOC, on or after November 4, 2021.  In addition to clarifying the procedures for anticircumvention inquiries, the Final Rule also significantly expands the potential impact of these proceedings, including by expanding the potential imposition of AD/CVD cash deposits, which may now even reach entries prior to the initiation of the anticircumvention inquiry.

Continue Reading Revisions to AD/CVD Regulations: Circumvention Inquiries