President Donald Trump and Chairman Kim Jong Un issued a joint statement at the conclusion of their summit in Singapore in which both countries committed to further negotiations and future cooperation for the development of new relations between the United States and the Democratic People’s Republic of Korea. In the statement, Trump committed “to provide security guarantees” to North Korea, and Kim reaffirmed “his firm and unwavering commitment to complete denuclearization of the Korean Peninsula.”

In a post-summit press conference, Trump stated that his meeting with Kim “was honest, direct, and productive … Today is the beginning of an arduous process. Our eyes are wide open, but peace is always worth the effort, especially in this case.” He added that all U.S. sanctions toward North Korea will remain in effect until “the nukes are no longer a factor.”

On June 7, 2018, the U.S. Department of Commerce announced that Zhongxing Telecommunications Equipment Corporation of Shenzhen, China (ZTE Corporation) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (ZTE Kangxun) (collectively, ZTE) had agreed to additional penalties and compliance measures to replace Commerce’s Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement. On April 15, 2018, BIS activated the suspended denial order against ZTE after learning that ZTE had not disciplined numerous employees responsible for the violations that led to the settlement agreement. Instead, ZTE rewarded those employees with bonuses. With the imposition of the denial order by BIS, ZTE announced in early May 2018 that all major operating activities of the company had ceased as a result of the denial order. On May 13, 2018, President Trump, against the advice of U.S. law enforcement and intelligence officials, announced that “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Continue Reading Department of Commerce Announces Sanctions Deal with China’s ZTE, but Will Congress Block It?

President Donald Trump signed yesterday two presidential proclamations adjusting imports of aluminum and steel into the United States. In doing so, he stated that measures are now in place to address the impairment to the national security threatened by imports of steel and aluminum from Argentina, Brazil and Australia. South Korea previously reached an agreement with the United States on April 30 to limit its imports of steel. President Trump added, however, that “similar measures are not in place with respect to steel or aluminum imports from Mexico, Canada or the European Union” and that insufficient progress had been made in ongoing negotiations with these countries. He declared that, as of June 1, 2018, the Section 232 tariffs for steel of 25 percent and for aluminum of 10 percent will no longer be suspended for such imports from these countries. The White House indicated that it will continue discussions with them and remains open to discussions with other countries that may lead to permanent country-based exemptions. Continue Reading Trump Administration Implements Section 232 Tariffs on Steel and Aluminum Imports from Canada, Mexico and the European Union

Key Notes:

  • On May 23, 2018, the Department of Commerce self initiated a Section 232 national security investigation concerning the imports of automobiles and automotive parts.
  • A formal docket has been opened for the submission of public comments and requests to appear at a public hearing July 19-20, 2018.
  • The Department of Commerce has 270 days to issue its findings and submit a report to the president.

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President Trump has released a statement setting forth the steps that his administration will undertake in an effort to protect domestic technology and intellectual property from China’s unfair and discriminatory trade practices. These actions are the result of the findings of the U.S. Trade Representative investigation pursuant to Section 301 of the Trade Act of 1974. On March 22, 2018, the president issued a Presidential Memorandum announcing the findings of that investigation, but in recent weeks there had been indications that any “trade war” and tariffs against China would be put on hold pending further discussions and negotiations. With today’s announcement, the United States will:

  • implement “specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology.” These restrictions and controls will be announced by June 30, 2018.
  • continue to pursue dispute settlement proceedings before the World Trade Organization for violations of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) based on China’s discriminatory practices for licensing intellectual property. The United States filed the case regarding these violations on March 23, 2018.
  • continue with its Section 301 trade action and impose a 25 percent tariff on $50 billion of goods imported from China. The final list of covered imports will be announced by June 15, 2018.

The statement notes that the United States “will request that China remove all of its many trade barriers, including non-monetary trade barriers, which make it both difficult and unfair to do business there” and that “tariffs and taxes between the two countries be reciprocal in nature and value.”

Secretary of Commerce Wilbur Ross, at the direction of President Donald Trump, has initiated an investigation to determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232 of the Trade Expansion Act of 1962. “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” said Secretary Ross. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.” President Trump stated that, “Core industries such as automobiles and automotive parts are critical to our strength as a Nation.”

According to Commerce, during the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent. From 1990 to 2017, employment in motor vehicle production in the United States declined by 22 percent. The investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States by potentially reducing research, development and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.

A formal notice of the investigation setting forth the scope and schedule will be published in the Federal Register in the near future.

In response to the United States’ withdrawal from the Joint Comprehensive Plan of Action (JCPOA, also informally known as the Iran nuclear deal) on May 8, 2018, the European Union (EU) has announced that it will take several actions in an effort to continue the full implementation of the JCPOA and to protect EU businesses. These actions are:

  • Initiate the formal process to activate the “blocking statute” by updating the list of U.S. sanctions on Iran falling within its scope. The blocking statute forbids EU persons from complying with U.S. extraterritorial sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the EU of any foreign court judgments based on them. The intent is to have these blocking regulations in force before August 6, 2018, when the first wind-down period ends and certain U.S. trade and economic sanctions are reinstated.
  • Begin the formal process to remove obstacles for the European Investment Bank (EIB) to decide under the EU budget guarantee to finance activities outside the EU in Iran. This will allow the EIB to support EU investment in Iran and could be useful for small and medium-sized companies.

Before full implementation of these actions, the European Parliament and the Council of the European Union will have up to a two-month period to object to these measures. The EU has also encouraged the following actions:

  • As confidence-building measures, the European Commission will continue and strengthen the ongoing sectoral cooperation with, and assistance to, Iran, including in the energy sector and as to small and medium-sized companies. Financial assistance through development cooperation or partnership instruments will also be mobilized.
  • The Commission is encouraging member states to explore the possibility of one-off bank transfers to the Central Bank of Iran. This could help the Iranian authorities to receive their oil-related revenues, particularly with U.S. sanctions that could target EU entities active in oil transactions with Iran.

Once implemented, these measures will likely leave foreign companies in the difficult position of determining any associated risks and potential penalties of continuing business transactions in Iran in support of the EU position to maintain the terms of the JCPOA, or risk running afoul of U.S. secondary sanctions pertaining to Iran that seek to limit and possibly penalize non-U.S. companies that conduct business in Iran as well as in the United States.

Over the weekend, China and the United States continued bilateral trade consultations and announced they had reached a consensus on “taking effective measures to substantially reduce the United States trade deficit in goods with China.” In a Joint Statement, both countries agreed (1) to increases in U.S. agriculture and energy exports, (2) on the need for more favorable conditions for trade in manufactured goods and services, and (3) that China would address intellectual property protections. According to Treasury Secretary Steven Mnuchin, the two countries are “putting the trade war on hold.”

Despite these announcements, Thompson Hine has confirmed with the Office of the U.S. Trade Representative that the China Section 301 investigation and determination continues. The previously published deadline of May 22, 2018, remains in effect for submitting rebuttal comments to last week’s multi-day Section 301 committee hearing on the investigation and the proposed list of products that would receive an additional duty of 25 percent. Upon receiving all final rebuttal comments, the committee will continue its review and analysis of what categories of the Harmonized Tariff Schedule of the United States (HTSUS) will remain on the list, which may be removed, and whether any new categories may be added.

President Trump has announced that the United States will withdraw from the Joint Comprehensive Plan of Action (JCPOA, also informally known as the Iran nuclear deal) that was entered into in 2015 by Iran, the United States, China, France, Germany, Russia and the United Kingdom. The JCPOA was negotiated in an effort to ensure that Iran’s nuclear program would be used exclusively for non-military, peaceful means. On January 16, 2016, the JCPOA was formally implemented and certain trade and economic sanctions against Iran were relaxed by the other parties to the deal. From its inception, the Iran nuclear deal has had its share of proponents and critics, and was a hot-button issue during the 2016 presidential election. During the campaign, and since, President Trump repeatedly stated that the deal was “one of the worst and most one-sided transactions the United States has ever entered into.” In making today’s announcement, President Trump stated that the JCPOA was “defective at its core” since it would not prevent Iran from ultimately developing a nuclear bomb. He argued that the sunset provisions of the deal and the onsite inspection provisions were clearly inadequate, and at the time when the United States had “maximum leverage,” it entered into a deal that gave Iran, a “leading state sponsor of terrorism,” billions of dollars. The president called the agreement “a great embarrassment to me as a citizen and all citizens of the United States.” Continue Reading President Trump Announces U.S. Withdrawal from Iran Nuclear Deal

Top trade officials from the United States, Canada and Mexico will resume negotiations over revisions to NAFTA this week in an effort to finalize an agreement. Reports indicate that while progress has been made, a number of issues remain, including rules of origin pertaining to automobiles, dispute settlement, government procurement and labor.

All parties agree that May will be a critical month in these renegotiations given upcoming events and important time lines. Mexico’s presidential election will occur in July 2018, and U.S. mid-term congressional elections will occur in November 2018. U.S. Trade Representative Robert Lighthizer has indicated a strong desire to conclude negotiations in May in order to seek approval from the current Congress under Trade Promotion Authority.

Trump and Trade has prepared a slide presentation, Summary of NAFTA’s History, Development and Current Status, for our readers as negotiations enter their final phase.