U.S. trade and investment policy continues to evolve rapidly and the pace has not slowed down in the new year. Over the past two months, the Trump administration has been active on a wide range of trade issues. The administration released a number of trade-related presidential proclamations, executive orders and regulations, and the President has signed major legislation with trade implications. Below is a summary of 10 selected significant developments. To read an in-depth version please click here.
- The Trump Administration Issued a New Executive Order on Importer of Record Criteria. On January 31, 2020, the Trump Administration issued an executive order intended to implement the administration’s policy to prevent the circumvention of U.S. laws and the avoidance of U.S. duties, taxes, and fees in e-commerce transactions. The executive order directs certain actions recommended by the Department of Homeland Security (“DHS”) in its recent report to the President on “Combating Trafficking in Counterfeit and Pirated Goods,” released on January 24.
- President Trump Signed the United States-Mexico-Canada Agreement Implementing Legislation into Law. On January 29, 2020, President Trump signed the United States-Mexico-Canada Agreement (“USMCA”) implementing legislation into law. The USMCA could go into effect as early as July 1, 2020. Companies with significant North American operations, particularly those currently taking advantage of North American Free Trade Agreement benefits, should review USMCA and the U.S. implementing legislation to determine how the new agreement may affect their activities for the remainder of 2020 and in the future.
- The Trump Administration Imposed New Section 232 Tariffs on Derivative Aluminum and Steel Articles. On January 24, President Trump issued a proclamation imposing additional duties of 10 percent and 25 percent on “derivative aluminum articles” and “derivative steel articles,” respectively, under Section 232 of the Trade Expansion Act of 1962, as amended. These additional duties go into effect February 8, 2020.
- The United States and China Concluded a Phase One Agreement. On January 15, the United States and China signed an agreement officially called the “Economic and Trade Agreement Between the United States of America and the People’s Republic of China” (the “Phase One agreement”). Under the Phase One agreement, China agreed that, over the next two years, it will purchase $200 billion more of U.S. manufactured articles, agricultural goods, energy products and services than it did in 2017. China also agreed to certain provisions that should lead to greater market access for U.S. agricultural products and for U.S. financial services companies. In exchange, the United States has suspended the imposition of certain duties previously announced on Chinese imports under Section 301 of the Trade Act of 1974.
- Treasury Released New CFIUS Regulations. On January 13, the U.S. Department of the Treasury issued final and interim regulations implementing the Foreign Investment Risk Review Modernization Act of 2018. The final CFIUS regulations will go into effect on February 13, 2020. Please be on the look-out for additional information and updates on USMCA to come.
- The Trump Administration Imposed New Iran Secondary Sanctions. On January 10, the Trump Administration issued Executive Order 13902, “Imposing Sanctions with Respect to Additional Sectors of Iran.” The Executive Order authorizes the Secretary of the Treasury to impose sanctions on (i) persons operating in the construction, mining, manufacturing or textiles sectors of the Iranian economy, (ii) persons who knowingly engage in significant transactions in Iran involving those sectors and (iii) foreign financial institutions that facilitate such transactions.
- Commerce Released an Export Interim Rule on Geospatial Imagery Software. On January 6, Commerce’s Bureau of Industry and Security (“BIS”) published an interim final rule, with immediate effect, placing export controls on certain “geospatial imagery ‘software’ ‘specially designed’ for training a Deep Convolutional Neural Network to automate the analysis of geospatial imagery and point clouds.” This license requirement extends to releases of software source code to foreign nationals inside the United States. BIS is accepting comments until March 6, 2020.
- The State Department Announced Amendments to the ITAR. On December 26, 2019, the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) announced an interim final rule (the Interim Rule) amending the International Traffic in Arms Regulations (ITAR). The long-awaited Interim Rule provides a definition of activities that are not exports, re-exports, retransfers or temporary imports, which most notably includes electronic transmission and storage of properly secured unclassified technical data via foreign communications infrastructure. This change is expected to significantly reduce export control compliance burdens for U.S. industry.
- The United States Imposed Sanctions on Russian Energy Export Pipeline Projects under the 2020 NDAA. On December 20, 2019, the United States enacted the National Defense Authorization Act for Fiscal Year 2020 (NDAA). Section 7503 of the NDAA imposes mandatory sanctions on parties engaged in certain activities related to Russian energy export pipelines, including the Nord Stream 2 pipeline project. The Secretary of State must submit an initial report to Congress identifying the vessels and persons described above no later than 60 days after December 20, 2019 (i.e., by February 18, 2020).
- The Department of Justice Issued a New Voluntary Self-Disclosure Policy for Export Control and Sanctions Violations. On December 13, 2019, the Department of Justice (DOJ) announced a revised policy regarding voluntary self-disclosures of export control and sanctions violations (the VSD Policy). The VSD Policy encourages companies to voluntarily disclose all potentially criminal export control and sanctions violations directly to DOJ’s National Security Division (NSD). The new policy includes key differences from the NSD’s previous guidance.
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