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

On December 8, the European Commission (Commission) published a proposal for a new anti-coercion instrument (ACI) to deter and, if necessary, retaliate against third countries seeking to change the course of EU or EU Member State policy by exerting economic coercion against the EU or its Member States. Third country coercion is understood broadly and may range from using explicit coercion and trade defense tools, to selective border or food safety checks on goods from a given EU country, to boycotts of goods of a certain origin. Essentially, the draft Regulation’s aim is to preserve the EU and its Member States’ ability to make political decisions and policy choices without undue foreign interference.

The proposal builds on a Joint Declaration in favor of such an instrument, signed by the Commission, the Council of the EU and the European Parliament. Stakeholders have also recognized the problem of economic intimidation and coercion against EU interests in the Commission’s consultation, thereby supporting an EU-level instrument. As stated by MEP Bernd Lange (rapporteur on the new EU anti-coercion instrument, INTA Chair, S&D, Germany) the EU is operating in an “increasingly harsh geopolitical landscape”, and is increasingly the target of economic pressure.

Continue Reading European Commission Proposes an Anti-Coercion Instrument to Strengthen its Trade Defense Toolbox

On 2 October 2020, India and South Africa submitted to the Council for Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) of the World Trade Organization (“WTO”) a proposed waiver from the implementation, application and enforcement of intellectual property (“IP”) rights under the WTO TRIPS Agreement (“COVID Waiver”) insofar as these rights relate to the prevention, containment, and treatment of COVID-19.  In essence, the COVID Waiver would allow WTO Members to forgo some protections of IP rights set out in the TRIPS Agreement in the hope that this waiver could speed up the production of affordable medical products including COVID diagnostic kits, vaccines, medicines, personal protective equipment and ventilators.

The proposed COVID Waiver has divided the WTO Membership.  While a majority of WTO Members have expressed support for the COVID Waiver, some developed countries (such as the EU, Korea, Japan, Australia and Singapore) have expressed reservations as to whether the COVID Waiver is necessary and whether it would actually help achieve the aim that it is intended to serve.

Continue Reading Tensions Between Consensus and Voting in WTO Decision-Making – Part II: The Proposed Waiver on TRIPS and COVID-19

On 17 November 2021, in the wake of the Glasgow Climate Change Conference (COP26), the European Commission (“Commission”) presented its Proposal for a Regulation that aims to curb deforestation and forest degradation driven by European Union (“EU”) consumption and production (“Proposed Regulation”). The wider goal of the rule is to reduce greenhouse gas (“GHG”) emissions and global diversity loss, by minimising the consumption of products from supply chains associated with deforestation or forest degradation.

Already announced in 2019, the Proposed Regulation fits in the wider context of the European Green Deal, the Commission’s flagship initiative to transform the EU from a high- to a low-carbon economy. It follows similar initiatives in the United States (“U.S.”) and United Kingdom (“UK”), as discussed in more detail here.

The Proposed Regulation complements and expands on existing EU legislation, such as the EU Timber Regulation (“EUTR”) and the Forest law Enforcement, Governance and Trade Regulation (“FLEGT Regulation”), and would be complementary to the Commission’s legislative initiative on Sustainable Corporate Governance (“SCG”). Of note, it would integrate and improve the framework created by the EUTR, which would be repealed by the adoption of the Proposed Regulation.

Continue Reading The European Commission’s Proposed Ban on Products Driving Deforestation and Forest Degradation

On October 6, 2021, Senator Brian Schatz (D-HI) and Representatives Earl Blumenauer (D-OR) and Brian Fitzpatrick (R-PA) introduced the Fostering Overseas Rule of Law and Environmentally Sound Trade (“FOREST”) Act of 2021 to “deter commodity-driven illegal deforestation around the world.”

The FOREST Act aims to disincentive illegal deforestation by restricting certain commodities and derivative products originating from illegally deforested lands from accessing the U.S. market.  If the FOREST Act is passed by Congress, foreign producers of “covered commodities,” such as: palm oil, soy, cocoa, cattle, rubber, and wood pulp, as well as foreign companies that produce products that are wholly or partially derived from these commodities will be affected by the new legislation.

A similar deforestation proposal has been introduced in the United Kingdom, and another is expected to be published by the European Commission under a proposed Regulation on November17, 2021.  As some of the largest consumers of agricultural commodities, the introduction of deforestation legislation in the United States, the United Kingdom, and the European Union could be the start of a larger global effort to address one of the most environmentally harmful practices using trade measures.  Depending on their terms and how they are implemented, the FOREST Act and its counterparts in the EU and UK could have negative implications for foreign producers and primary exporting countries of the commodities, if passed into law in any of these three jurisdictions.

Continue Reading Potential Implications of the FOREST Act of 2021 and Related Developments in Other Jurisdictions

On October 30, 2021, the United States and the European Union (“EU”) reached an agreement to replace the tariffs imposed under Section 232 of the Trade Expansion Act of 1962  (“Section 232”) on EU imports of steel and aluminum with a tariff-rate quota (“TRQ”) that is scheduled to take effect on January 1, 2022.  The deal allows a certain volume of EU steel and aluminum to enter the United States each year without the application of Section 232 tariffs.  Imports over that volume will be subject to Section 232 tariffs, which are currently 25 percent for steel imports, and 10 percent for aluminum imports.

According to details released by the Department of Commerce (“Commerce”), the TRQ is based on historical import values and will be allocated by product and by EU Member State.  For steel, the TRQ will be broken down into 54 product categories, with the total annual amount set at 3.3 million metric tons per year, starting in 2022.  The annual amount for the aluminum TRQ will be 18,000 metric tons for unwrought aluminum and 366,000 metric tons for semi-finished (wrought) aluminum.  The quota levels for unwrought aluminum will be subdivided into two product categories, and the quota levels for semi-finished aluminum will be subdivided into fourteen product categories. The United States will conduct annual reviews to adjust the steel TRQ amount based on US demand using data from the World Steel Association, but at this point there is no similar provision to adjust the levels of the aluminum TRQ.

Continue Reading Client Alert: US and EU Reach Agreement Regarding Section 232 Tariffs on Steel and Aluminum Imports

The Final Rule published by the U.S. Department of Commerce (“DOC”) on September 20, 2021, makes substantial modifications to the DOC’s regulations on scope proceedings to be conducted under antidumping and countervailing duty (“AD/CVD”) orders.  These new rules amend the scope inquiry process in a number of places, including, among others: giving the DOC discretion to self-initiate a scope inquiry; requiring more detailed information for a scope inquiry application; eliminating the informal scope inquiry procedure; establishing new time limits for the scope inquiry; and giving interested parties additional time to submit comments.  Perhaps most importantly, these new regulations accelerate the timeline for imposing provisional relief against imports believed to fall within the scope of an AD/CVD order, and permit the imposition of an AD/CVD cash deposit requirement on entries made prior to the initiation of a scope inquiry.

Continue Reading Revisions to the Department of Commerce’s Antidumping / Countervailing Duty Regulation: Scope Proceedings