In this issue:
Ukraine Crisis Resource Center
- Top Trade Developments
- Latest Russia Sanctions/Export Highlights
- USTR Releases Preview of Questionnaire for Four-Year Section 301 Tariff Review
- CBP Updates CTPAT Trade Compliance Handbook and Forced Labor Requirements
- CFIUS Formalizes Its Enforcement and Penalty Process
- U.S. Department of Commerce's Bureau of Industry and Security Strengthens Antiboycott Regulations
- New U.S. Restrictions on Transfers to China for Semiconductor and Advanced Computing Uses
- USTR Seeks Public Comments on the Effectiveness of Section 301 Tariffs on Chinese Goods
- Customs Rulings of the Week
Crowell in the Press
This news bulletin is provided by the International
Trade Group of Crowell & Moring. If you have questions or need
assistance on trade law matters, please contact Jana del-Cerro, Anand Sithian, or Simeon Yerokunor any member of
the International Trade Group.
Ukraine Crisis Resource Center
Crowell & Moring has a multidisciplinary working group helping clients navigate the rapidly evolving business, legal and operational issues associated with the crisis. Our group brings together lawyers and professionals with relevant senior government, industry, and private sector experience across a wide array of practices that intersect with the most critical issues in this unprecedented crisis. We are helping clients to mitigate risk, to implement practical approaches and sound business solutions, and anticipate and prepare for the opportunities and challenges that are on the horizon.
Top Trade Developments
Latest Russia Sanctions/Export Highlights
For more information, contact: Jeff Snyder, Carlton Greene,
Dj Wolff, Michelle Linderman, Caroline Brown, Nicole Succar, Anand
Sithian, Laurel Saito, Rachel Schumacher
USTR Releases Preview of Questionnaire for Four-Year Section 301 Tariff Review
On Tuesday (Nov. 1, 2022), the Office of the United States Trade Representative (USTR) released a preview of its questionnaire seeking comments on the effectiveness and impacts of the additional duties levied on Chinese-origin goods enacted under Section 301 of the Trade Act of 1974 ("Section 301 tariffs"). The Section 301 tariffs, which commenced in 2018 and have undergone various additions and exclusions in the years since, were the result of the USTR's investigation and findings of unfair and discriminatory trade practices by China. This new comment period is part of the USTR's ongoing statutorily-required four-year review of the Section 301 tariffs.
Importers and other interested parties should treat this new comment period as a key opportunity to communicate directly with the USTR about the Section 301 tariffs and to influence how the USTR may modify or retain the tariffs going forward. The docket for submitting comments will open on November 15, 2022, and close on January 17, 2023.
USTR's 4-Year Docket Review Questionnaire: What to Expect
The USTR's questionnaire (here) provides three sets of questions, which we describe below. Commenters can submit one or more of these sections based on their views. Commenters may also supplement their questionnaire responses with attachments.
Section A (Effectiveness and Economy-Wide Impact). The first section requests that stakeholders gauge the effectiveness and economy-wide impacts of the Section 301 tariffs. Stakeholders can share perspectives on whether, for example, the tariffs have impacted China's use of discriminatory policies, what changes China has made to those policies (if any), and whether the tariffs have counteracted China's policies. Additionally, stakeholders can describe how the tariffs can be more effective, their impact on the U.S. economy, and any alternate policy suggestions that the USTR should consider.
Section B (Sector/Industry-Specific Impact). The second section requests comments on whether the tariffs have been effective in eliminating discriminatory Chinese practices pertinent to specific sectors or industries. Stakeholders can provide a detailed analysis of the sector/industry-specific impacts that the Section 301 tariffs or other policy options may have on U.S. employment, wages, domestic manufacturing, capital investment, supply chain shifts and resiliency, and consumer goods.
Section C (Tariff-Specific Impact). The third section requests comments about specific tariff subheadings covered by the Section 301 tariffs and whether those tariffs should be maintained, eliminated, or changed. The questionnaire asks whether tariffs on specific goods have affected domestic manufacturing, U.S. employment and wages, small businesses, inventory practices for products or downstream products, and supply chain shifts. Further, stakeholders are given the opportunity to identify goods that have not been subject to Section 301 tariffs and that, in their opinion, should be. Identified tariff codes will require an explanation of how new tariffs could counter discriminatory Chinese policies and impact the U.S. economy.
All comments will be posted on the docket, USTR-2022-0014 (here). While comments will be publicly accessible, certain questions will allow for the removal of business confidential information.
For more information, contact: John Brew, Maria Vanikiotis,
CBP Updates CTPAT Trade Compliance Handbook and Forced Labor Requirements
On November 1, U.S. Customs and Border Protection (CBP) released its updated Customs Trade Partnership Against Terrorism (CTPAT) Trade Compliance handbook [here]. The handbook provides importers guidance on the internal controls needed to become a CTPAT Trade Compliance member, including guidance on the necessary requirements to ensure forced labor compliance. The CTPAT program provides benefits (e.g., less inspections) to importers, carriers and others who demonstrate required cargo security controls. The CTPAT Trade Compliance program provides importers even more benefits (e.g., reduced audits and penalties) that demonstrate sufficient controls of substantive import compliance operations. Participants of CTPAT Trade Compliance must be a member of the CTPAT Security program before applying for CTPAT Trade Compliance membership. Members of CTPAT Security do not need to be a member of CTPAT Trade Compliance.
On August 1, 2022, CBP announced six new requirements related to forced labor that members of the CTPAT Trade Compliance program will be required to comply with. Existing members will have until August 1, 2023 to implement the new forced labor elements. However, new applicants must meet the forced labor component at the time of application.
The new forced labor requirements for CTPAT Trade Compliance partners are as follows:
- Risk-based mapping. Partners are required to conduct a risk-based mapping of their business that outlines the supply chain in its entirety. Importers must determine what imports are considered high-risk and should utilize publicly available information that CBP provides. A company's code of conduct should include their commitment to business mapping. CBP may request unredacted proof of supply chain mapping regarding a particular supply chain at any time.
- Code of Conduct. Partners must create a code of conduct statement that represents their position against the use of forced labor within any part of their supply chain. The statement must be included in the company's forced labor social compliance program, as outlined in the CTPAT Security Minimum Security Criteria. The statement must be uploaded to the CTPAT online portal and made publicly available.
- Evidence of Implementation. Partners must provide CBP with evidence of implementation of their social compliance program. Examples of evidence may include unredacted audits of high-risk supply chain related to forced labor, contracts signed with suppliers, internal training programs for employees on identifying signs of forced labor, and mechanisms showing that a supply chain is free of the use of forced labor.
- Due Diligence and Training. Partners must provide training on the company'ssocial compliance program requirements to their suppliers, which helps identify and prevent forced labor in the supply chain. Training requirements are determined by the company based on the industry and risks. Partners must ensure that their suppliers' business model and code of conduct expressly state that they will not partner with any business that uses forced labor.
- Remediation Plan. Partners must maintain a remediation plan for their company in the event that forced labor is identified in the company's supply chains. The plan must include a process for disclosing the issue to CBP and outline the necessary steps for employees and suppliers to undertake to correct the issue.
- Shared Best Practices and Path Forward. Partners will share best practices with the CTPAT Trade Compliance program, as appropriate, to help mitigate the risk of forced labor. CBP is in the process of operationalizing the data and to share with the CTPAT community.
CBP publishes monthly operational reports and has recently provided trade statistics related to forced labor detentions. Below is a summary chart to illustrate the number of reported forced labor entries targeted and the total value of the imports. The forced labor data has only been reported for two months included below.
Value (in Millions)
For more information, contact: John Brew, Laurel Saito, Wing Cheung
CFIUS Formalizes Its Enforcement and Penalty Process
On October 20, 2022, the Committee on Foreign Investment in the U.S. (CFIUS) adopted long-awaited CFIUS Enforcement and Penalty Guidelines (the "Guidelines") identifying how it will review and consider three categories of non-compliances that may be subject to penalties:
For more information, contact: Caroline Brown, Addie Cliffe,
Alan W.H. Gourley, Jana del-Cerro, Nimrah Najeeb
U.S. Department of Commerce's Bureau of Industry and Security Strengthens Antiboycott Regulations
On October 7, 2022, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) simultaneously published a final rule strengthening the antiboycott regulations in Part 766 of the Export Administration Regulations (EAR) (the "Final Rule"), as well as a memorandum on the new rule's implementation (the "Final Rule Memo"), issued by the Assistant Secretary for Enforcement. Pursuant to the Final Rule, BIS will make three primary changes:
For more information, contact: Jeff Snyder, Dj Wolff, Jeremy
Iloulian, Rachel Schumacher
New U.S. Restrictions on Transfers to China for Semiconductor and Advanced Computing Uses
Two new rules announced by the U.S. Department of Commerce, Bureau of Industry and Security (BIS) strive to severely inhibit China's progress in indigenously producing advanced semiconductors. Although advanced semiconductors are widely used for commercial applications, BIS cited serious concerns regarding China's use of the technology for WMD and military applications, and enabling human rights violations or abuses.
BIS' announcement follows remarks in September by the U.S. National Security Advisor signaling a shift in the U.S. export control strategy from one of maintaining a "relative" advantage over competitors in certain key technologies, to maintaining "as large a lead as possible." It remains to be seen if U.S. allies key to the semiconductor supply chain will impose similar export restrictions on transfers to China. Following the announcement of the rules, BIS officials have underscored the importance of multilateral adoption of the new currently unilateral controls, describing engagement with allies as a "priority" for BIS.
For more information, contact: Jeff Snyder, Alan W.H.
Gourley, Jeremy Iloulian, Chandler Leonard
USTR Seeks Public Comments on the Effectiveness of Section 301 Tariffs on Chinese Goods
The Office of the U.S. Trade Representative (USTR) announced on Wednesday in a Federal Register notice that it is seeking public comments on the effectiveness of Section 301 tariffs on Chinese goods. The docket to post comments will open on November 15, 2022 and close on January 17, 2023. USTR welcomes any interested party to submit comments on the effects of the tariffs on the United States economy, including consumers.
In particular, USTR requests comments detailing the effect of these tariffs on U.S. small business, U.S. supply chain resiliency, domestic manufacturing, domestic capital investments, domestic capacity, and whether the actions have resulted in higher additional duties on inputs used for downstream products in domestic manufacturing. In addition to comments submitted on the effect of the tariffs on the U.S. economy, USTR also announced it will consider comments addressing the effectiveness of the actions in obtaining the elimination of China's practices related to technology transfer, intellectual property, and innovation. Commenters may also propose other actions or modifications that would be more effective in obtaining the elimination of China's practices related to technology transfer, intellectual property, and innovation.
This request for public comments is part of a four-year review being conducted by USTR of the initial and modified trade actions undertaken by the Trump administration in the Section 301 investigation of China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. In May, USTR commenced the statutory four-year review and solicited comments from the domestic industries which benefitted from the trade actions. Following more than 400 comments requesting to keep tariffs in place, USTR announced in September that the tariffs would stay in place as the review continues.
Business groups that believe the tariffs have harmed U.S. consumers and producers relying on inputs sourced from China will now be able to share their experiences of dealing with Section 301 tariffs for the past 4 years. While the USTR already requested comments from domestic industry benefiting from the tariffs over the summer, supporters of the Section 301 tariffs will still have further opportunities to offer their opinions on the effect of the U.S. economy this time around. There are no statutory deadlines for when USTR must come to a final decision of its 4-year review.
A vocal group of business leaders have been calling for a restart of a robust exclusion process following the expiration of the majority of product exclusions. It remains to be seen whether USTR will continue with blanket tariffs on almost all Chinese goods or switch to a more targeted approach only hitting select industries.
For more information, contact: John Brew, Sam Boone
Customs Rulings of the Week
For more information, contact: Maria Vanikiotis,
Martín Yerovi, Emily Devereaux
Crowell in the Press
October 26, 2022 – Bloomberg Law Podcast features a conversation with Ambassador Robert Holleyman, president and CEO of C&M International, the global government relations, public affairs affiliate of Crowell & Moring. Holleyman discuss the impact of the UK's new prime minister Rishi Sunak on U.S.-UK trade relations. Listen to the podcast here.
October 26, 2022 – Global Trade Review* speaks with partner Dj Wolff about the U.S. government signaling stricter enforcement of its antiboycott rules. According to Wolff, antiboycott rules had become a lower area of focus for many companies over the years, with trade finance banks most at risk of violating some provisions in the rules. He says that while the change presents less financial risk, the new policy requiring an admission of guilt means the reputational damage for a violation may be more severe ("Banks Face Stiffer Penalties for US AntiBoycott Violations"). *subscription required
October 20, 2022 – CBS News speaks with Ambassador Robert Holleyman, partner and C&M International president & CEO, regarding concerns about the lingering effects of the country's instability on the world stage ("Global Concern Rises Following resignation of UK Prime Minister Liz Truss").
October 14, 2022 – Global Investigations Review* speaks with New York counsel Anand Sithian regarding the first-ever parallel FinCen and OFAC's resolution in a crypto case. According to Sithian, the enforcement action shows OFAC's expectations that companies must think about their compliance obligations for the data they collect, and emphasizes the need to consider how to screen that data ("Bittrex Fines a Sign of More to Come"). *subscription required
October 4, 2022 –
Cryptoslate.com features a video interview with partner Carlton Greene and counsel Anand Sithian regarding the OFAC sanctions on
Tornado Cash and the implied future risks for the future of crypto
and DeFi ("SlateCast #22 – Legal Insight Into Whether
Crypto Sanctions Are Going Too Far").
John Brew was a panelist on Section 301 Tariffs Policy at the 11th Advanced Forum on Import Compliance and Enforcement, November 8-9, 2022 at the Kimpton Hotel Monaco DC, Washington, DC.
"Balancing Expanded U.S. and China Export Controls and Sanctions," Everlaw Annual Compliance Meeting (October 28, 2022). Speaker; Zhiwei Chen.
"Potpourri of Practice Pitfalls: Ethics Concerns in Customs/Trade Practice." 21st Judicial Conference of the United States Court of International Trade, Washington, D.C. (October 27, 2022). Speaker: Simeon Yerokun.
"How Should Chinese Subsidiaries of Multinationals Balance the Conflicts Between China and U.S. Export Controls," Everlaw Webinar (October 21, 2022). Speaker: Zhiwei Chen.
"Understanding Court of International Trade (CIT) Cases," 2022 Fall International Compliance Professionals Association (ICPA) Conference, Grapevine, TX. (October 18, 2022). Speaker: John B. Brew.
ACI Forum on Digital Assets Compliance: AML, Sanctions & Fraud (October 13, 2022). Speaker: Carlton Greene.
"Blockchain, Crypto, Bored Apes, Oh My!" National Association of Women Lawyers Webinar, 2022. (October 4, 2022). Speakers: Caroline E. Brown.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.