After receiving over 4,000 Miscellaneous Tariff Bill (MTB) petitions seeking to temporarily reduce or eliminate tariffs on the import of various goods into the United States (see Trump and Trade Update of October 1, 2019), the U.S. International Trade Commission (USITC) has been posting petitions satisfying the statutory filing criteria on a rolling basis on the MTB Petition System (MTBPS) portal. Beginning on January 10, 2020 and continuing until 5:15 p.m. ET on February 24, 2020, interested parties may file public comments on these petitions. All comments must be filed through the MTBPS portal during this 45-day comment period, and all comments will be visible to the public.

The USITC has recorded a webinar, “How to File a Comment on a Miscellaneous Tariff Bill Petition,” which includes step-by-step instructions on how to file comments through the MTBPS portal. Among other helpful comments, the webinar notes that:

  • Petitioners will NOT receive alerts if or when their petitions receive comments;
  • Commenters (and rebutting petitioners) must bracket confidential information so as not to be included in any public version of the comments and rebuttals; and
  • While all petitions are currently available in the MTBPS portal, USITC will soon provide a link to a user-friendly Excel file of all petitions with limited information such as product name, Chemical Abstracts Service (CAS) registry number and petition ID number.

On December 13, 2019, the U.S. Department of Justice (DOJ) released a revised policy for companies regarding voluntary self-disclosures of export control and sanctions violations. The revised policy was effective on the date of its release and will be formally incorporated into the Justice Manual. In releasing the revised Voluntary Self-Disclosure Policy (VSD Policy), Assistant Attorney General for National Security John C. Demers stated, “Protecting our nation’s sensitive technologies and preventing transactions with sanctioned entities are DOJ priorities, but we cannot succeed alone … We need the private sector to come forward and work with DOJ. The revised VSD Policy should reassure companies that, when they do report violations directly to DOJ, the benefits of their cooperation will be concrete and significant.”

Key Notes:

  • The revised Voluntary Self-Disclosure Policy builds on the guidance DOJ’s National Security Division (NSD) issued in October 2016.
  • This revised policy signals DOJ’s continued emphasis on corporate voluntary self-disclosure, rewarding cooperating companies with a presumption in favor of a non-prosecution agreement and significant reductions in penalties.
  • The policy was effective on December 13, 2019, and applies only to export control and sanctions matters brought by the NSD’s Counterintelligence and Export Control Section.

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On December 30, 2019, the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) issued an interim final rule seeking to amend the International Traffic in Arms Regulations (ITAR) with definitions more clearly explaining activities that are not considered to be exports, reexports, retransfers or temporary imports of secured and unclassified technical data. This interim final rule is part of DDTC’s ongoing effort to update the ITAR and will become effective on March 25, 2020. Before that date, DDTC is accepting public comments on the rule until January 27, 2020.

While the interim final rule addresses a number of definitions, a new definition has been proposed under a new section of the ITAR, 22 C.F.R. §120.54, covering activities that are not exports and thus not controlled and subject to the ITAR, including:

  • Launching a spacecraft, launch vehicle, payload or other item into space; DDTC states that such an activity “is already excluded from the definition of an export” in other sections of the ITAR and by statute but that it has been consolidated and simplified under this section.
  • Transmitting or otherwise transferring technical data to a U.S. person in the United States from a person in the United States; DDTC states that such an activity is “unequivocally not a controlled event.”
  • Transmitting or otherwise transferring within the same foreign country technical data between or among only U.S. persons, as long as the transmission or transfer does not result in a release to a foreign person or transfer to a person prohibited from receiving the technical data.
  • Shipping, moving or transferring defense articles between or among the United States, which includes all states, possessions and territories of the United States.
  • Sending, storing or taking unclassified technical data when it is effectively encrypted using end-to-end encryption.

The proposal regarding the sending, storing or taking of unclassified technical data is intended to help address questions and concerns as to email transmissions as well as cloud computing and storage. DDTC makes clear that electronic transmissions and storage of secured unclassified technical data is not an export as long as the “technical data is encrypted prior to leaving the sender’s facilities and remains encrypted until decrypted by the intended authorized recipient or retrieved by the sender, as in the case of remote storage.” This provision contains important requirements that must be met in order to remain compliant with U.S. export control laws and to prevent an unauthorized or inadvertent export violation.

The transmission must employ end-to-end encryption, which is defined as: (i) the provision of cryptographic protection of data, such that the data is not in an unencrypted form, between an originator (or the originator’s in-country security boundary) and an intended recipient (or the recipient’s in-country security boundary); and (ii) the means of decryption are not provided to any third party. Further, the transmission and/or storage must be secured using “cryptographic modules (hardware or software) compliant with the Federal Information Processing Standards Publication 140-2 (FIPS 140-2) or its successors, supplemented by software implementation, cryptographic key management, and other procedures and controls that are in accordance with guidance provided in current U.S. National Institute for Standards and Technology (NIST) publications, or by other cryptographic means that provide security strength that is at least comparable to the minimum 128 bits of security strength achieved by the Advanced Encryption Standard (AES-128).” Also, the sending, storing or taking of secured unclassified technical data may not involve, be stored in or be sent from the Russian Federation or a DDTC-restricted country, including Belarus, Burma, China, Cuba, Iran, North Korea, Syria, Venezuela, Afghanistan, Central African Republic, Cyprus, Democratic Republic of Congo, Eritrea, Haiti, Iraq, Lebanon, Libya, Somalia, South Sudan, Sudan and Zimbabwe.

Those interested in addressing the interim final rule before the January 27, 2020 deadline may submit comments by (i) email to DDTCPublicComments@state.gov with the subject line, ‘‘Revisions to Definitions; Data Transmission and Storage’’ or (ii) using the federal rulemaking portal at www.regulations.gov and filing comments under Docket DOS–2019–0040.

The Office of the U.S. Trade Representative (USTR) announced on December 31, 2019 additional Section 301 tariff exclusions for certain imported Chinese products appearing on List 3. These products have been subject to Section 301 tariffs since September 24, 2018, when President Donald Trump announced additional import duties on Chinese goods with an annual trade value of approximately $200 billion.

This batch of approved product exclusions covers two 10-digit Harmonized Tariff Schedule (HTS) subheadings in their entirety and 66 specially-prepared product descriptions covering 81 separately filed exclusion requests. The two HTS subheadings are 8712.00.1510 and 8712.00.1550, which involve certain bicycles. The specially prepared product description exclusions cover: endless synchronous belts of vulcanized rubber, molded polyurethane, neoprene, or welded urethane; certain leather briefcases; certain storage containers of paulownia wood or twisted paper rope; certain woven fabrics; certain vault doors and safes of carbon steel; certain steel clamps with rubber insulation; certain spring-loaded telescoping poles of steel or aluminum; certain awning and decorative cast aluminum endcaps; certain steel hand tools for crimping/stripping or cutting wire; certain steel valve lifters; certain hand or foot operated air pumps; certain ventilation fans for motor vehicles; certain portable air compressors; certain electric winches; certain wireless battery chargers; alternators for motor vehicles charging systems; certain automobile alarm systems; certain color video cameras for use with microscopes; certain ultraviolet lamps used for skin tanning purposes; certain hand held, battery-powered electrical devices that administer transcutaneous electrical nerve stimulation (TENS) and electrical muscle stimulation (EMS); certain motor mount kits; certain bicycle saddles; certain compound binocular optical microscopes; certain stackable upholstered metal chairs for religious worship settings; certain hunting stands of steel or aluminum; certain wheeled trays; certain baby crib liners; and, certain light boxes that provide light therapy for seasonal and sleep disorders.

These product exclusions will be retroactive to September 24, 2018, and remain in effect until August 7, 2020. These exclusions apply to any product that satisfies the description in the annex of the Federal Register notice, regardless of whether the company using the exclusion filed the request. Each exclusion is governed by the scope of the HTS heading and the product description appearing in the annex of the exclusion notice; it is not governed by the product description set out in any particular exclusion request. U.S. Customs and Border Protection will soon issue instructions on entry guidance and implementation. USTR will continue to issue determinations on pending requests on a periodic basis.

The Office of the U.S. Trade Representative (USTR) has issued a Federal Register notice seeking public comment on the extension of certain product exclusions it granted in March 2019 in the ongoing trade dispute with China. These exclusions were part of the first round of Section 301 tariffs placed on imports of Chinese goods with an annual trade value of approximately $34 billion (List/Tranche 1 products). These exclusions were granted in March 2019 (see Trump and Trade Update of March 21, 2019), and are scheduled to expire on March 25, 2020. The USTR is considering a possible extension of up to 12 months for these exclusions and seeks public comment on whether to extend particular ones.

USTR states that it will evaluate the possible extension of each exclusion on a case-by-case basis. The focus of the evaluation will be “whether, despite the first imposition of these additional duties in July 2018, the particular product remains available only from China.” These issues should be addressed in submitting any comments:

  • Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
  • Any changes in the global supply chain since July 2018 as to the particular product, or any other relevant industry developments.
  • The efforts, if any, the importers or U.S. purchasers have undertaken since July 2018 to source the product from the United States or third countries.

In addition, USTR notes that it will continue to consider whether the imposition of additional duties on the products covered by the exclusion will result in severe economic harm to the commenter or other U.S. interests.

USTR will accept comments between January 15 and February 15, 2020. All submissions must be made electronically via the www.regulations.gov portal on docket number USTR-2019-0024. USTR strongly recommends that those wishing to comment complete Exclusion Extension Comment: Form A, which will be posted on the public docket. Importers and purchasers may also submit Exclusion Extension Comment: Form B containing business confidential information via email to 301bcisubmissions@ustr.eop.gov, which will not be made available to the public. If filing a Form B, submitters, USTR notes, must also file a public Form A. These forms will be posted on USTR’s website by the time the docket opens.

At this time, USTR is considering the possible extension of product exclusions only for those exclusions granted in March 2019; no other extensions under any other product exclusion notices issued by USTR will be considered.

Playing the role of Scrooge, 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 December 2018 (see Trump and Trade Update of October 29, 2019), has determined that it will only grant six extensions covering the following Harmonized Tariff Schedule (HTS) subheadings and product descriptions:

  • HTS subheading 8418.69.0120
  • HTS subheading 8525.60.1010
  • Roller machines with dies for embossing paper, manually powered (described in statistical reporting number 8420.10.9080)
  • Angle cock handle assemblies, of iron and steel, each measuring 11.43 cm by 21.59 cm by 5.08 cm and weighing 0.748 kg (described in statistical reporting number 8481.90.9040)
  • Radiation therapy systems, each encased by steel-based structural shell with gantry cover comprising three pairs of plastics-based panels (described in statistical reporting number 9022.14.0000)
  • Thermostats designed for air conditioning or heating systems, not designed to connect to the internet, the foregoing designed for wall mounting (described in statistical reporting number 9032.10.0030

These HTS subheadings and products are currently subject to additional tariffs of 25 percent under the China Section 301 proceeding covering products imported into the United States worth approximately $34 billion (List 1), and the granted exclusions were set to expire on December 28, 2019. 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 December 28, 2020, will continue to be excluded from the additional duty rate. All other Section 301 exclusions granted on December 28, 2018 will expire as of midnight, December 28, 2019 (see Trump and Trade Update of January 2, 2019).

Pursuant to the December 13, 2019 “Phase One” trade agreement with China (see Trump and Trade Update of December 13, 2019), the Office of the U.S. Trade Representative (USTR) issued a Federal Register notice today, formally announcing that the Section 301 tariff of 15 percent on certain products from China (List 4B) scheduled to take effect on December 15, 2019, has been suspended indefinitely.  Also, pursuant to the agreement, the USTR stated that it expects to publish another notice in the near future formalizing the Section 301 tariff reduction from 15 percent to 7.5 percent for Chinese products on List 4A.

The Office of the U.S. Trade Representative (USTR) has announced additional Section 301 tariff exclusions for certain imported Chinese products appearing on List 3. These products have been subject to Section 301 tariffs since September 24, 2018, when President Donald Trump announced additional import duties on Chinese goods with an annual trade value of approximately $200 billion. Despite the December 13, 2019 announcement of the “Phase One” trade agreement with China (see Trump and Trade Update of December 13, 2019), the 25 percent tariff on products covered under List 3 will indefinitely remain in place.

This batch of approved product exclusions covers nine 10-digit Harmonized Tariff Schedule (HTS) subheadings in their entirety and 35 specially-prepared product descriptions covering 75 separately filed exclusion requests. The nine HTS subheadings are: 0304.72.5000; 0304.83.1015; 0304.83.1020; 0304.83.5090; 8507.20.4000; 8708.50.8500; 8708.94.7510; 8708.99.8105; and 8712.00.1520. The specially-prepared product description exclusions cover: various freeze-dried fruits; certain slats and spices; certain satin woven fabrics; certain nonwoven rug pads; certain ropes of man-made fibers; certain steel gates for confining children or pets; certain electrical boxes designed for lighting fixtures; certain multi-position aluminum ladders; types of aluminum towers intended to be mounted on boats for water sport towing purposes; various types of electronic calculators and calculating machines; certain static converters, rectifiers and rectifying apparatus; certain LED headlights and lightbars for off-road, all-terrain vehicles; various types of brake drums for motor vehicles; certain types of upholstered dining chairs; certain three- and four-legged chairs for outdoor use; various electric household chandeliers and table lamps; and certain non-electrical wall candelabras.

These product exclusions will be retroactive to September 24, 2018, and remain in effect until August 7, 2020. These exclusions apply to any product that satisfies the description in the annex of the Federal Register notice, regardless of whether the company using the exclusion filed the request. Each exclusion is governed by the scope of the HTS heading and the product description appearing in the annex of the exclusion notice; it is not governed by the product description set out in any particular exclusion request. U.S. Customs and Border Protection will soon issue instructions on entry guidance and implementation. USTR will continue to issue determinations on pending requests on a periodic basis.

After reaching agreement with congressional Democrats on the United States-Mexico-Canada Trade Agreement (USMCA) (see Trump and Trade Update of December 10, 2019), the Trump administration has forwarded to the Senate Finance Committee the necessary legislative text to implement the agreement. The House of Representatives’ Committee on Ways & Means will take up consideration of the legislation on December 17, with full House consideration and passage scheduled for December 19. While the House is expected to pass the bill before the holiday recess, Senate Majority Leader Mitch McConnell has announced that Senate passage will not occur until the chamber reconvenes in January 2020 and after other pending business is handled. In the House, the bill has been assigned bill number H.R. 5430.

In submitting the USMCA implementation legislation to the Congress, President Donald Trump also submitted a Statement of Administrative Action (SAA) representing the expression by his administration concerning its views regarding the interpretation and application of the USMCA, both for purposes of U.S. international obligations and domestic law. This SAA details the administrative actions proposed to implement U.S. obligations under the USMCA. In addition, it incorporated two other statements: (1) an explanation of how the implementing bill and proposed administrative action will change or affect existing law; and (2) a statement setting forth the reasons why the implementing bill and proposed administrative action are necessary or appropriate to carry out the USMCA. The SAA notes that “[a]lthough the USMCA is a comprehensive overhaul of the NAFTA [North America Free Trade Agreement], many provisions of NAFTA are replicated so that the treatment the United States has committed to provide to Canada and Mexico remains the same.”

President Donald Trump has confirmed via Twitter that the United States and China have agreed to a “Phase One Deal.” In this agreement, China will reportedly purchase $200 billion of U.S. products and services over the next two years, including an apparent agreement to purchase $40-50 billion of agricultural goods. In addition, China has agreed to expand access to its financial services market and address certain aspects of its intellectual property protections. The United States, in return, will not implement Section 301 tariffs on List 4B products, which were scheduled to go into effect this Sunday, December 15, and will reduce Section 301 tariffs on List 4A products by half, from 15 percent to 7.5 percent. Section 301 tariffs on products appearing on Lists 1-3, however, will remain at 25 percent.

According to an Office of the U.S. Trade Representative (USTR) press release, the United States and China have reached a “deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.”

UPDATE 12/16/19: While no formal documents have been released, USTR has prepared a Fact Sheet summarizing key areas of the agreement. It indicates that the Phase One agreement will address two key aspects of the related Section 301 investigation into certain trade practices of China: (1) Intellectual Property protections – addressing concerns in the areas of trade secrets, pharmaceutical-related intellectual property, geographical indications, trademarks and enforcement against pirated and counterfeit goods; and (2) Technology Transfer protections – setting forth binding and enforceable obligations to address certain unfair technology transfer practices of China. The fact sheet also discusses structural barriers to agricultural trade; reducing trade and investment barriers to U.S. financial service providers; policy and transparency commitments related to currency practices; and dispute resolution measures. Both USTR and Chinese Ministry of Commerce officials have indicated that the text must undergo further legal review and translation.