Please join us for a webinar on Thursday, April 30 from noon to 1:15 p.m. ET discussing the impact of the COVID-19 pandemic on international trade. During the webinar we will discuss:

  • U.S. and foreign government restrictions on the export of personal protective equipment (PPE)
  • Impact on U.S. customs duties
    • Section 301 tariff product exclusions for medical equipment and supplies
    • Potential impact in response to Congress’s requested ITC investigation and report
  • Changes to domestic procurement preferences for U.S. government purchases
  • Ex-Im Bank initiatives and other U.S. government financing available to support trade activity

Our presenters will include:

Please register online to receive instructions on how to join the webinar. We will apply for CLE credit in the states requested on the registration form.

As noted in previous posts, we and our foreign law firm partners continue to update our chart of COVID-19 measures taken by governments around the world. This update includes new information for most countries as noted in the chart: view/download the most recent version.

Please see our Trump and Trade Update of April 7 for additional discussion of this initiative.

On March 17, 2020, the Office of the U.S. Trade Representative (USTR) notified Congress of its intent to negotiate a trade agreement with the Republic of Kenya (see Trump and Trade Update of March 18, 2020) and shortly thereafter solicited public comments and announced a public hearing on the proposed United States-Kenya trade agreement. USTR has now announced that due to ongoing concerns with COVID–19, it is cancelling the public hearing that was scheduled for April 28, 2020. However, the period in which to submit written comments has been extended until April 28, 2020 from the original deadline of April 15, 2020.

For written submissions, USTR is interested in comments as to the issues that should be addressed in any negotiations, including:

  • General and product-specific negotiating objectives for the proposed agreement.
  • Relevant barriers to trade in goods and services between the United States and Kenya.
  • Economic costs and benefits to U.S. producers and consumers of removal or reduction of tariffs and non-tariff barriers on articles traded with Kenya.
  • Treatment of specific goods (classified under the Harmonized Tariff Schedule of the United States or HTSUS) under the proposed agreement, including comments on the following:
    • Product-specific import or export interests or barriers.
    • Experience with particular measures that USTR should address in the negotiations.
    • Ways to address export priorities and import sensitivities in the context of the proposed agreement.
  • Fees, charges, and taxes affecting trade in goods and services between the United States and Kenya.
  • Customs and trade facilitation issues, including those related to preshipment inspection.
  • Sanitary and phytosanitary measures and technical barriers to trade.
  • Transparency issues.
  • Other measures or practices, including those of third-country entities, which undermine fair market opportunities for U.S. businesses, workers, farmers, and ranchers.

All written comments should be submitted on-line via the Federal ePortal at www.regulations.gov, using Docket No. USTR–2020–0011.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has published amendments in the Federal Register to the North Korea Sanctions Regulations, 31 C.F.R. 510.101-.901 (NKSR), which became effective April 10, 2020. The new amendments incorporate into the NKSR certain provisions of the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), as amended by the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and the National Defense Authorization Act for Fiscal Year 2020 (NDAA 2020). The amendments:

  • Expand the list of prohibited activity and transactions;
  • Add blocking and correspondent account sanctions provisions;
  • Add a new prohibition applicable to persons owned or controlled by a U.S. financial institution and established or maintained outside the United States;
  • Add new statutory exemptions relevant to certain newly added prohibitions;
  • Make technical and conforming edits to three definitions, including “luxury goods” and “significant transactions;”
  • Revise an interpretive provision; and
  • Update the authorities and delegation sections of the regulations.

On December 20, 2019, President Donald Trump  signed into law the 2020 NDAA, which, among other things, amended the NKSPEA by adding new blocking and correspondent or payable-through account sanctions at sections 104(g), 201B, and 201C. These have been incorporated by OFAC into the NKSR as  § 510.201(a)(3)(vii) through (x). OFAC is also incorporating additional correspondent or payable-through account sanctions of section 201B of NKSPEA into  § 510.210(c) of the NKSR, and of section 201C into § 510.214 of the NKSR.

Despite a tightening of economic sanctions on Venezuela under President Donald Trump, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) occasionally issues General Licenses clarifying, authorizing or exempting certain U.S. activities involving the Venezuelan government  or entities directly and indirectly affiliated with Petróleos de Venezuela, S.A (PdVSA).  Starting in January 2019, President Trump issued an Executive Order expanding the sanctions targeting PdVSA (see Trump and Trade Update of January 19, 2019).  One such license, General License 5, addressed the ability to enforce bondholder rights to any CITGO shares serving as collateral for the “Petróleos de Venezuela, S.A. 2020 8.5 percent bond.”  This general license removed certain restrictions contained in Executive Order 13835 (Section1(a)(iii)) as an obstacle to holders of the PdVSA 2020 8.5 percent bond gaining access to their collateral.

On April 10, 2020, OFAC issued General License 5C that delayed the license until July 22, 2020.  Until then, transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5 percent bond are prohibited, unless specifically authorized by OFAC.  OFAC notes:  “To the extent an agreement may be reached on proposals to restructure or refinance payments due to the holders of the PdVSA 2020 8.5 percent bond, additional licensing requirements may apply.  OFAC would encourage parties to apply for a specific license and would have a favorable licensing policy toward such an agreement.”

 

As noted in previous posts, we and our foreign law firm partners continue to update our chart of COVID-19 measures taken by governments around the world. The most recent version is available here. This update includes new information for Belgium, China, European Union, Netherlands, Poland, South Africa and United Kingdom.

Please see our Trump and Trade Update of April 7 for discussion of this initiative.

On April 7, 2020, the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) issued a temporary final rule to establish export restrictions on certain types of personal protective equipment products (PPE) used in the response to the COVID-19 pandemic.

Key Notes:

  • Effective April 7, 2020, most exports from the United States of certain respirators, masks and gloves require approval from FEMA.
  • Restrictions continue until August 8, 2020.

Continue reading: view this client bulletin in HTML or PDF format.

In addition to its role in enforcing U.S. export control laws, the Department of Commerce’s Bureau of Industry and Security (BIS) is charged with administering and enforcing the antiboycott laws under the Export Administration Act. These antiboycott laws were adopted to encourage and, in some circumstances, require U.S. companies to refuse to participate in foreign boycotts that the United States government does not sanction. According to BIS, the laws “have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy.” Together, the Department of the Treasury (via the 1976 Tax Reform Act) and BIS’s Office of Antiboycott Compliance have oversight as to efforts to counteract the participation of U.S. persons and companies in other countries’ economic boycotts or embargoes.

Semi-annually, Treasury releases a notice to the public of countries that require or may require participation in, or cooperation with, an international boycott. In a Federal Register notice of April 9, 2020, the following countries were identified:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

On February 13, 2020, the Committee on Foreign Investment in the United States (CFIUS) fully implemented the Foreign Investment Risk Review Modernization Act (FIRRMA) (see Trump and Trade Update of January 22, 2020). Under FIRRMA, CFIUS was granted additional authority to review certain real estate transactions involving foreign persons when the public or private real estate is located near designated airports, maritime ports, military installations or sensitive government facilities.

As such, CFIUS issued regulations effective February 13 pertaining to “Certain Transactions by Foreign Persons Involving Real Estate in the United States.” To fall under these regulations, the foreign person would have to gain at least three of the following property rights in covered real estate – (i) physical access to the property; (ii) the right to exclude others from the property; (iii) right to improve or develop the property; or (iv) the right to attach structures to the property. In working with other national security-related agencies, CFIUS prepared a list of designated airports, maritime ports, military bases and other sensitive government installations.

Covered real estate is defined as:

  • Ports: Is a covered port, located within, or will function as part of a covered port;
  • Close proximity: Areas within one mile of a certain identified military installations or other property;
  • Extended range: Areas within 100 miles of certain identified military installations;
  • Facilities located within designated counties and geographic areas: As designated in Appendix A of the regulations (see below); and
  • Off-shore ranges: Within any part of military installations, identified in the Appendix, that is within the territorial seas (12 nautical miles) of the United States

The list of designated airports and maritime ports can be accessed here:

The list of 190 military and sensitive government installations can be accessed here:

    • Military installations primarily located onshore are listed in Parts 1-3 of Appendix A to 31 C.F.R. Part 802.
    • Military installations primarily located offshore are listed in Part 4 of the Appendix. Further, CFIUS has noted that the Marine Cadastre National Viewer may also be helpful (users must apply the “Military Operating Area Boundaries” layer in order to see the different offshore zones).

There are various exceptions for certain real estate transactions, including investment in an “urbanized area” or “urban cluster,” as defined by the Census Bureau, a foreign person’s purchase or lease of a single housing unit, transactions involving certain commercial office space in a multi-unit commercial office building, and for certain “excepted foreign states.”  For more details on such exceptions, see Thompson Hine’s Business Law Update – Winter 2020.

Recently, CFIUS released a “CFIUS Part 802 Geographic Reference Tool” as a resource to locate specific real estate in relation to the listed military installations. This mapping tool allows users to input an address and determine the distance to certain military installations, but is provided for reference purposes only. In other words, it is not intended to be legally definitive as to whether a location is within the geographic range.

Notification to CFIUS for covered real estate transactions remains voluntary; however, only by receiving clearance from CFIUS will a transaction be exempt from future CFIUS action to unwind.

The Office of the U.S. Trade Representative (USTR), after seeking comments on whether to extend for another year certain product exclusions it granted in April 2019 (see Trump and Trade Update of February 5, 2020), has granted eight extensions covering the following Harmonized Tariff Schedule (HTS) subheadings and product descriptions:

  • Roller machines designed for cutting, etching or embossing paper, foil or fabric, manually powered (described in statistical reporting number 8420.10.9080);
  • Ratchet winches designed for use with textile fabric strapping (described in statistical reporting number (8425.39.0100);
  • Counterweight castings of iron or steel designed for use on fork lift and other work trucks (described in statistical reporting number 8431.20.0000);
  • Tines, carriages, and other goods handling apparatus and parts designed for use on fork lift and other works trucks (described in statistical reporting number 8431.20.0000);
  • Reject doors, pin protectors, liners, front walls, grates, hammers, rotor and end disc caps, and anvil and breaker bars, of iron or steel, the foregoing parts of metal shredders (described in statistical reporting number 8479.90.9496);
  • Steering wheels designed for watercraft, of stainless steel, having a wheel diameter exceeding 27 cm but not exceeding 78 cm (described in statistical reporting number 8479.90.9496);
  • Pipe brackets of aluminum, each with four ports, the foregoing measuring 27.9 cm x 20.3 cm x 17.8 cm and weighing 11.34 kg, designed for installation into air brake control valves (described in statistical reporting number 8481.90.9040); and
  • Instruments for measuring or checking voltage or electrical connections; electrical circuit tracers (described in statistical reporting number 9030.33.3800).

These HTS subheadings and products are currently subject to the Section 301 25 percent tariff covering Chinese products imported into the United States worth approximately $34 billion (List 1), and their exclusions to the tariff were set to expire on April 18, 2020. With this extension, such products entering the United States for consumption, or withdrawn from warehouse for consumption, on or after July 6, 2018 and before April 18, 2021, will continue to be excluded from the additional duty. All other Section 301 exclusions granted in April 2019 will expire as of midnight, April 18, 2020 (see Trump and Trade Update of April 18, 2019).