On December 11, 2024, the Office of the United States Trade Representative (USTR) announced tariff increases under Section 301 of the Trade Act of 1974 for imports from China of certain tungsten products, wafers, and polysilicon. Beginning on January 1, 2025, the rates for solar wafers and polysilicon will increase to 50%, and the rates for certain tungsten products will increase to 25%. The Federal Register notice for this action can be found here.

These tariff increases had been proposed as part of the four-year statutory Section 301 review of the tariff actions previously taken in the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. These modifications conclude the statutory review. 

For additional background on the four-year review and recent USTR actions, see Thompson Hine Updates of September 20, 2024, September 16, 2024 and May 15, 2024.

On December 10, 2024, the Office of the U.S. Trade Representative (USTR) announced it was initiating an investigation into Nicaragua’s acts, policies, and practices related to labor rights, human rights, and the rule of law. The investigation will be conducted under Section 301 of the Trade Act of 1974 and is the first under Section 301 to investigate such matters. The USTR press release states that the United States is concerned that the Ortega-Murillo regime in Nicaragua is engaging in repressive and persistent attacks on labor rights, human rights, and the rule of law. The USTR will seek to determine whether these acts, policies, or practices are actionable under Section 301 and, if so, determine what action to take.

Ambassador Katherine Tai stated: “Unfortunately, numerous reports suggest the Government of Nicaragua is engaging in repressive acts that harm Nicaragua’s own workers and people, undermine fair competition, and destabilize our region. USTR will thoroughly investigate the alleged violations of labor rights and human rights, and dismantling of the rule of law.” The announcement notes credible reports by the U.S. government and United Nations that document persistent attacks on labor rights, human rights, and the rule of law. These actions include politically-motivated arrests and imprisonments, repression of members of religious groups and non-governmental organizations, extrajudicial killings, cruel, inhuman or degrading treatment, restrictions on freedom of expression and movement, violence against members of marginalized groups, repression of freedom of association and collective bargaining, forced labor, human trafficking, the elimination of legislative and judicial independence, spurious seizures of property, arbitrary fines and rulings, and other harmful acts. The USTR notes that such actions may impact U.S. workers and companies, harming both Nicaraguans directly and U.S. workers and businesses indirectly through unfair competition by (1) negatively impacting the Nicaraguan economy and market, (2) causing lost sales and exports for U.S. enterprises, and (3) reducing investment and business opportunities for U.S. workers and companies.

The USTR will now seek consultations with Nicaragua in connection with the investigation. In addition, the USTR is seeking public comments on:

  • Nicaragua’s acts, policies, and practices related to labor rights, human rights, and the rule of law.
  • Whether Nicaragua’s acts, policies, and practices related to labor rights, human rights, and the rule of law are unreasonable or discriminatory.
  • Whether Nicaragua’s acts, policies, and practices related to labor rights, human rights, and the rule of law burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction. Such comments may include economic assessments of the burden or restriction on any sector or industry and assessments of the burden or restriction on labor in the United States related to the acts, policies, and practices under investigation.
  • The determinations required under Section 304 of the Trade Act on whether actionable conduct exists under Section 301(b) and what action, if any, should be taken.

Any written comments must be filed no later than January 8, 2025. Comments must be filed on the USTR portal at https://comments.ustr.gov/s/. Submissions should be placed on the docket entitled “Request for Comments on the Section 301 Investigation of Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights, and Rule of Law,” docket number USTR-2024-0021. 

On January 16, 2025, the USTR Section 301 Committee will hold a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington DC 20436, beginning at 10:00 a.m. EST. Requests to appear at the hearing and a summary of testimony must be filed by January 8, 2025; and any post-hearing comments must be filed by January 23, 2025. Notice of intent and summary of testimony must be filed on the USTR portal under the docket entitled “Request to Appear at the Hearing on the Section 301 Investigation of Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights, and Rule of Law,” docket number USTR-2024-0022.

On December 4, 2024, U.S. Customs and Border Protection (CBP) released a forced labor finding concerning aluminum extrusions and profile products produced wholly or in part by Kingtom Aluminio S.R.L. (“Kingtom”), a Chinese-owned aluminum extruder in the Dominican Republic. Effective December 4, CBP will seize any articles that are covered by CBP’s forced labor finding and commence asset forfeiture proceedings unless the importer shows with satisfactory evidence that the merchandise was not produced with forced labor.

19 U.S.C. § 1307 prohibits the importation of any product “mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor.” Forced labor is defined to include any “work or service which is exacted from any person under the menace of any penalty for its non-performance and for which the worker does not offer himself voluntarily.” To enforce this prohibition, CBP can issue withhold release orders or forced labor findings, among others, and require the seizure of the products covered by those orders/findings.

CBP’s investigation was initiated upon a petition filed by the Aluminum Extruder Council and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. According to a press release, during its investigation CBP identified issues concerning multiple International Labour Organization forced labor indicators, including withholding of wages and restriction of movement, in Kingtom’s facilities. As a result, CBP concluded that there is sufficient information to support its finding that Kingtom is using forced labor in the Dominican Republic to produce aluminum extrusions and profile products and derivatives, and that such products are being imported into the United States. These products are “used widely to build transportation and construction products, furniture, electronics, and more.”

Unlike withhold release orders, reexporting the goods will not be an option for products covered by this forced labor finding. According to CBP’s notice, the finding covers “aluminum extrusions and profile products and derivatives produced or manufactured wholly or in part with aluminum and articles thereof classified under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7604.21.0010, 7604.29.1010, 7604.29.3060, 7604.29.5050, 7604.29.5090, 7608.20.0090, 7610.90.0080 and any other relevant subheadings under Chapter 76, which are produced or manufactured wholly or in part by” Kingtom.

On December 3, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was “intensifying pressure” on Iran’s petroleum and petrochemical sectors by imposing sanctions on 35 entities and vessels “that play a critical role in transporting illicit Iranian petroleum to foreign markets.” This action identifies and imposes further sanctions on Iran’s “shadow fleet” of vessels that Iran relies upon in a network of tankers and ship management firms in multiple jurisdictions to transport its petroleum to overseas customers by using tactics such as false documentation, manipulation of vessel tracking systems, and constant changes to the names and flags of vessels. This most recent action is in further response to Iran’s October 1 attack on Israel, as well as Iran’s announced nuclear escalations. It also builds on the sanctions issued on October 11, 2024. See Thompson Hine Update of October 14, 2024. 

The Secretary of the Treasury has identified the petroleum and petrochemical sectors of the Iranian economy pursuant to a Determination under section 1(a)(i) of Executive Order (E.O.) 13902, which allows Treasury to identify and impose sanctions on key sectors of Iran’s economy. Acting Under Secretary for Terrorism and Financial Intelligence Bradley Smith stated that, “[t]he United States remains committed to disrupting the shadow fleet of vessels and operators that facilitate these illicit activities, using the full range of our tools and authorities.”  For additional identifying details on these shipping management entities and vessels located in multiple countries see here.

As a result of these OFAC actions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50% or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

On November 25, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced new export controls targeting Pakistan to address concerns about the diversion of certain items to unauthorized end uses or end users, particularly those on the Entity List. The final rule, effective November 25, 2024, imposes new licensing requirements on specific items destined for Pakistan.

Key Items and ECCNs

The new controls apply to six categories of items, now subject to licensing requirements for regional stability (RS) reasons. These items fall under the following Export Control Classification Numbers (ECCNs):

  • 1B999: Specific Processing Equipment
  • 2A992: Piping, fittings, and valves made of, or lined with stainless, copper-nickel alloy, or other alloy steel containing 10% or more nickel and/or chromium
  • 2B999: Specific Processing Equipment, n.e.s. (excluding 2B999.h.2)
  • 3A992: General purpose electronic equipment not controlled by 3A002
  • 3A999: Specific Processing Equipment, n.e.s.
  • 6A996: Magnetometers not controlled by ECCN 6A006, superconductive electromagnetic sensors, and specially designed components therefor

Licensing Requirements & Exceptions

Exporters must now seek a license from BIS to export, reexport, or transfer (in-country) items controlled under these ECCNs to or within Pakistan. License exceptions are limited and generally unavailable when a party on the Entity List is involved in the transaction.

License applications will be reviewed on a case-by-case basis to assess the risk of use in, or diversion to, an end use or end user of concern. Applications presenting an unacceptable risk will be denied.

Impact & Compliance

The new controls are expected to increase the number of license applications submitted to BIS. Exporters are encouraged to review BIS’s Pakistan Due Diligence Guidance located on its website. Shipments en route on December 26, 2024 may proceed under previous eligibility unless otherwise required by law.

The new export controls on Pakistan are particularly newsworthy given the historical context of U.S. export regulations. Previously, both India and Pakistan were subject to stringent controls under the EAR due to significant concerns over nuclear proliferation. These controls were initially imposed following nuclear tests conducted by both countries in the late 1990s. Over time, while certain entities in Pakistan remained on the Entity List, broader controls were somewhat relaxed as part of diplomatic and trade considerations. However, the most recent actions by the BIS suggest a renewed focus on Pakistan as a proliferation concern. The imposition of new licensing requirements for specific items indicates that the U.S. government is once again prioritizing the prevention of unauthorized use of dual-use technologies and addressing the risk of diversion to entities involved in activities contrary to U.S. national security and foreign policy interests.

On November 22, 2024, the Department of Homeland Security (DHS) announced the addition of 29 companies based in China to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, bringing the total number of entities on the UFLPA Entity List to 107. The newly identified and listed companies are involved in (i) electronic materials and aluminum and alloy production, (ii) mining, smelting, and processing raw metallic materials, and (iii) the production and sale of various agricultural products. In a press release, DHS stated it “is taking these steps as part of its commitment to eliminating the use of forced labor practices in U.S. supply chains and promoting accountability for the ongoing genocide and crimes against humanity against Uyghurs and other religious and ethnic minority groups in the Xinjiang Uyghur Autonomous Region (XUAR).”

Pursuant to a forthcoming Federal Register Notice, effective November 25, 2024, U.S. Customs and Border Protection (CBP) will apply a rebuttable presumption that goods produced by the newly listed entities are made by forced labor and will be prohibited from entering the United States as a result of the companies’ activities, either sourcing materials from the XUAR or working with the government of Xinjiang to recruit, transport, transfer, harbor, or receive Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR. 

For general background information on the Uyghur Forced Labor Prevention Act (UFLPA), see Thompson Hine’s International Trade Update of June 2022.

On November 21, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Gazprombank, more than 50 internationally connected small-to-medium Russian banks, more than 40 Russian securities registrars, and 15 Russian finance officials. Treasury Secretary Janet Yellen stated that these sanctions target “Russia’s largest remaining non-designated bank, as well as dozens of other financial institutions and officials in Russia, [and] will further diminish and degrade Russia’s war machine. This sweeping action will make it harder for the Kremlin to evade U.S. sanctions and fund and equip its military.” OFAC has issued a press release that provides a comprehensive overview of these latest sanctions toward Russia’s banking and financial sector.

OFAC designated and placed on the Specially Designated Nationals (SDN) List Gazprombank Joint Stock Company (Gazprombank) and its six foreign subsidiaries – GPB International SA, GPB Financial Services Hong Kong Limited, GPB Financial Services Limited, GPB-DI Holdings Limited, Gazprombank (Switzerland) Ltd, and GPB Africa and Middle East Pty Ltd. For additional details and identifying information on these banks and the other designated financial institutions see here. As a result, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50% or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

OFAC has issued two new Russia-related general licenses (GL) authorizing U.S. persons to wind down transactions involving Gazprombank, among other financial institutions, and to take the necessary steps to divest from debt or equity issued by Gazprombank.

  • GL 113 authorizes the wind down of transactions involving numerous financial institutions placed on the SDN List, including Gazprombank. All transactions with these entities that are ordinarily incident and necessary to the wind down of transactions involving the blocked persons, and any entity in which those blocked persons own, directly or indirectly, individually or in the aggregate, a 50% or greater interest, are authorized through 12:01 a.m. eastern standard time, December 20, 2024.
  • GL 114 authorizes certain transactions related to debt or equity of, or derivative contracts involving Gazprombank Joint Stock Company; Interstate Bank; or any entity in which these entities own, directly or indirectly, individually or in the aggregate, a 50% or greater interest. All transactions with these entities that are ordinarily incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity issued or guaranteed by these blocked entities to a non-U.S. person are authorized through 12:01 a.m. eastern standard time, December 20, 2024.

In addition, OFAC has amended Russia-related GL 53A to ensure that diplomatic banking activities involving Gazprombank are not disrupted. OFAC has also amended GL55C authorizing certain services related to Sakhalin-2 oil and gas project and involving Gazprombank to continue until June 28, 2025. Certain transactions under each of these general licenses remain unauthorized and therefore each requires close analysis. Additionally, OFAC has issued two new Russia-related Frequently Asked Questions (FAQ 1201, FAQ 1202) and three amended Russia-related Frequently Asked Questions (FAQ 976, FAQ 1096, FAQ 1197) to address these new SDN List designations.

Finally, OFAC has also issued an alert describing sanctions risks for foreign financial institutions related to Russia’s System for Transfer of Financial Messages (SPFS, short for Sistema Peredachi Finansovykh Soobshcheniy), which Russia created as an alternative to the SWIFT network, and that OFAC states has been used to evade sanctions. OFAC notes that it views joining SPFS “after publication of this alert as a red flag and is prepared to more aggressively target foreign financial institutions that take such action.”

On November 21, 2024, Vitro Flat Glass, LLC and Vitro Meadville Flat Glass, LLC (“Petitioners”) requested the imposition of antidumping and countervailing duties on float glass imports from China and Malaysia. The Petitioners argue that the “increasing surge of subsidized and dumped float glass products from China and Malaysia is untenable for the American FGP industry and its plant workers …. [and that] if the situation is not remedied, the threat of continued future material injury is manifest.”

The scope of the petitions covers float glass products (FGP), which are articles of soda-lime-silica glass manufactured by floating a continuous strip of molten glass over a smooth bath of tin (or another liquid metal with a density greater than molten glass), cooling the glass in an annealing lehr, and cutting it to appropriate dimensions. While providing additional specifications, the Petitioners note that FGP “may be clear, stained, tinted, or coated with one or more materials to affect heat insulation properties, electrical conductivity, sound reduction, strength, durability, color, and/or the transmission of light. Examples of coated float glass products include low emissivity (“Low-E”) architectural glass and frameless mirrors (i.e., flat glass with a silver, aluminum, or other reflective layer) such as mirror stock sheet.” Float glass products can be used in various downstream applications, including: (1) architectural; (2) automotive and non-automotive transportation; (3) electronics; (4) furniture; and (5) interior design applications.

The products subject to the petitions are currently classifiable under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7005.10.8000, 7005.21.1010, 7005.21.1030, 7005.21.2000, 7005.29.1810, 7005.29.1850, 7005.29.2500, 7007.29.0000, 7008.00.0000, 7009.91.5010, 7009.91.5095, and 7009.92.5010. Products subject to the petitions may also enter under HTSUS subheadings 7006.00.4010, 7006.00.4050, and 7007.19.0000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of the petitions is dispositive.

In support of their allegations, the Petitioners reference data showing the volume of imports from the subject countries between October 2023 and September 2024 increased 50.2% from China and 7.7% from Malaysia. The Petitioners allege that the absolute volume of FGP imports from these countries increased by 106% — from 69,077 short tons in 2021 to 142,314 short tons in 2023. In their subsidy allegations, the Petitioners claim that FGP producers in China and Malaysia are eligible for various subsidies, including direct grants, preferential tax benefits, preferential lending and export financing, and the provision of export guarantees. Overall, the petitions state that “available evidence indicates that Chinese FGP producers are benefitting from illegal subsidies and dumping at rates up to 165.11 percent, and Malaysian FGP producers are similarly subsidized and dumping their product in the United States at rates up to 344.43 percent.”

For interested parties, the general issues and injury volume of the petition is available here. The Department of Commerce’s International Trade Administration now has 20 days following the filing of the petitions to determine whether to grant the Petitioners’ request for an investigation based upon their claims. Meanwhile, the International Trade Commission has 45 days to issue a preliminary determination on whether there is a reasonable indication that the subject imports are causing or threatening to cause material injury to the domestic industry.

On November 18, 2024, the Department of the Treasury (Treasury), as Chair of the interagency Committee on Foreign Investment in the United States (CFIUS), issued a final rule to enhance certain CFIUS procedures and sharpen its penalty and enforcement authorities. It revises certain provisions of the CFIUS regulations, 31 C.F.R. Parts 800 and 802, pertaining to penalties for (i) violations of statutory or regulatory provisions or agreements, conditions, or orders issued pursuant thereto; (ii) negotiation of mitigation agreements; (iii) requests for information by CFIUS; and, (iv) certain other procedures.

The final rule is the first substantive update to the monitoring and enforcement provisions of the CFIUS regulations since 2018, and follows a proposed rule issued in April 2024. See Thompson Hine Update of April 16, 2014. This final rule will become effective 30 days after publication in the Federal Register.

After seeking public comment, this final rule only made one revision to text of the proposed rule. Regarding the time frame for responding to proposed mitigation terms when the parties are presented with CFIUS mitigation proposals, the final rule no longer contains a three-day time frame for responding to mitigation proposals as a default rule. Instead, it provides that the CFIUS “Staff Chairperson may impose a time frame of no fewer than three business days for the party or parties to provide a substantive response to proposed risk mitigation terms, including revisions to such terms” on a discretionary basis in consideration of certain factors. This change from the proposed rule was made in consideration of the public comments indicating potential challenges in negotiating effective mitigation terms that a U.S. business can agree to and operationalize within a three-day time frame. This less specific language is intended to allow for sufficient time for consideration and negotiation, while also recognizing mandatory deadlines embedded in relevant CFIUS statutes.

Overall, the final rule enhances CFIUS’s authorities through the following key changes:

  • Expanding the types of information CFIUS can require transaction parties and other persons to submit when engaging with them on transactions that were not filed with CFIUS;
  • Allowing the CFIUS Staff Chairperson to set, as appropriate, a timeline for transaction parties to respond to risk mitigation proposals for matters under active review to assist CFIUS in concluding its reviews and investigations within the time frame required by statute;
  • Expanding the circumstances in which a civil monetary penalty may be imposed due to a party’s material misstatement and omission, including when the material misstatement or omission occurs outside a review or investigation of a transaction and when it occurs in the context of CFIUS’s monitoring and compliance functions;
  • Substantially increasing the maximum civil monetary penalty available for violations of obligations under the CFIUS statute and regulations, as well as agreements, orders, and conditions authorized by the statute and regulations, and introducing a new method for determining the maximum possible penalty for a breach of a mitigation agreement, condition, or order imposed;
  • Expanding the instances in which CFIUS may use its subpoena authority, including in connection with assessing national security risk associated with non-notified transactions; and
  • Extending the time frame for submission of a petition for reconsideration of a penalty to CFIUS and the number of days for CFIUS to respond to such a petition.

Parties should note that the final rule retains earlier language that increases the civil monetary penalty for any material misstatement or omission from $250,000 per violation to a maximum penalty of $5 million per violation or, for certain provisions of the regulations, the greater of $5 million or the value of the transaction. In assessing compliance and whether to bring an enforcement action in a particular case, CFIUS will continue to evaluate the facts and circumstances surrounding the conduct, including the aggravating and mitigating factors described in the CFIUS Enforcement and Penalty Guidelines.

The Department of the Treasury has issued a Final Rule to implement Executive Order 14105 of August 9, 2023, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.” This Final Rule provides the operative regulations and a detailed explanatory discussion regarding the intent and application of these new U.S. outbound investment regulations. This Final Rule is effective on January 2, 2025. Currently, only the People’s Republic of China, along with the Special Administrative Regions of Hong Kong and Macau, are identified as a country of concern. The Outbound Investment Security Program will be administered by the newly created Office of Global Transactions, within Treasury’s Office of Investment Security.

The Final Rule builds on Treasury’s August 2023 Advance Notice of Proposed Rulemaking and its July 2024 Notice of Proposed Rulemaking. Treasury invited comment on these earlier rulemaking efforts to develop the regulations. For additional details, see Thompson Hine Updates of June 25, 2024, and August 11, 2023. The Final Rule seeks to address earlier public comments on the scope and objective of the regulations by maintaining the goals of both open investment and protection of national security by focusing on U.S. investments that present a likelihood of conveying both capital and intangible benefits that can be exploited to accelerate the development of sensitive technologies or products critical for military, intelligence, surveillance, or cyber-enabled capabilities of countries of concern in ways that threaten the national security of the United States. This includes, but is not limited to, further clarification and changes to: (i) the definitions of covered transaction and excepted transaction; (ii) the knowledge standard; (iii) the illustrative list of factors to be considered in assessing whether a U.S. person has undertaken a “reasonable and diligent inquiry” with respect to a particular transaction, and further guidance on the information to gather for assessing information; (iv) edits to the definition of “AI system” and notifiable transactions involving AI systems, end use and technical thresholds; and, (v) the intracompany transfer exception. The Final Rule also allows a U.S. person to seek an exemption from the application of the prohibition or notification requirement on the basis that a transaction is in the national interest of the United States.

Treasury has also indicated that it intends to provide additional information following
publication of the Final Rule, and will engage in stakeholder outreach and education on the requirements in the Final Rule. At this time, Treasury does not anticipate establishing an advisory opinion process to allow parties to request determinations of whether a particular transaction is covered, notifiable, or prohibited.