In 2017 the United States agreed that it was time to modernise the 24-year-old North American Free Trade Agreement pact, launching months of negotiations that recently ended. When it comes into force, the United States-Mexico-Canada Agreement (USMCA) will strengthen national treatment protections for the covered financial services industry in the United States. This is set to take place throughout 2019, with the USMCA possibly coming into force in early 2020.
President Trump recently announced the United States' intention to withdraw from the Joint Comprehensive Plan of Action and re-impose secondary sanctions on Iran. The announcement was accompanied by wind-down periods during which non-US persons could wrap up transactions entered into prior to 8 May 2018. The final wind-down period recently expired and secondary sanctions were re-imposed on a broad swathe of Iranian persons and sectors of Iran's economy.
If the turbulence of 2018 caused business executives grief, 2019 is unlikely to provide much relief – particularly in light of the United States-Mexico-Canada Agreement. Further, Section 232 tariffs on many steel and aluminium imports are likely to continue throughout 2019, as will Section 301 tariffs on more than $200 billion worth of Chinese imports. Finally, the administration has announced its intent to start talks on new trade pacts with the European Union, the United Kingdom and Japan.
The United States and Mexico recently announced an agreement regarding key issues that have been the focus of trilateral discussions between the United States, Mexico and Canada for over one year. Although no text is yet available, the Office of the United States Trade Representative has released fact sheets addressing certain aspects of the preliminary agreement in principle.
The US State Department recently explained the waivers of the chemical and biological weapon sanctions against the Russian government, confirming that many exports – even of national security-controlled items – can still be exported to Russia. In short, unless the Trump administration imposes additional sanctions in three months' time, the effects on commercial business with Russia should be limited. However, these measures must still be implemented by the various government agencies.
The US administration recently announced that it will be imposing sanctions on the Russian government under the Chemical and Biological Weapons Control and Warfare Elimination Act 1991 over the use of a novichok nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal. Of the five sanctions to be imposed, the fifth – the prohibition on the export of national security-controlled items to the Russian government – is likely the most significant.
A US trade representative recently issued a statement advising that President Trump had directed him to consider raising the previously proposed 10% additional duty to be applied to $200 billion worth of Chinese goods (referred to as the List 3 products) to 25%. Importers are urged to review their imports from China and, if they are importing any of the products on List 3, to consider, at a minimum, filing written comments and possibly appearing at the scheduled public hearing.
Most US and multinational corporations are quick to say "we don't do business with North Korea". However, some companies will recognise the risk of sourcing products from businesses located outside North Korea that may use North Korean overseas workers or subcontract to North Korean companies. As such, the Office of Foreign Assets Control recently issued a useful guidance document that provides businesses a helping hand.
The secretary of commerce recently announced the initiation of a Section 232 investigation into the impact of uranium imports on US national security. The Department of Commerce will have 270 days to submit a report to President Trump on whether uranium imports threaten to impair national security. The president will then have 90 days to determine what action should be taken to address any adverse effects of the imports.
The United States Trade Representative recently released the procedures for filing exclusion requests for List 1 products subject to the 25% tariff pursuant to Section 301 of the Trade Act 1974. On the same day, China confirmed its retaliatory tariffs, prompting the Trump administration to publish a new list of products, proposing an additional 10% tariff on 6,031 product lines worth approximately $200 billion. Companies are urged to be strategic in considering a request for exclusion.
The United States Trade Representative (USTR) recently released two product lists relating to Section 301 duties. The first list is a culmination of a process that started on 13 April 2018, when the USTR published an initial list of products that would be subject to an additional 25% ad valorem tariff. The second list contains 284 additional product lines that will now undergo further review. Pharmaceutical products, textiles, apparel and footwear do not appear on the two recently released lists.
The secretary of the treasury recently stated that the United States was "putting the trade war on hold" pending negotiations with China to reduce the US trade deficit and address certain acts, policies and practices relating to IP rights. He subsequently clarified that his comments referred only to the proposed 25% tariff pursuant to Section 301 of the Trade Act 1974. These comments have raised questions regarding the status of the various safeguard tariffs announced by the Trump administration.
Canadian business leaders greeted President Trump's announcement that the exemptions for Canada (and Mexico) from the double-digit Section 232 tariffs on certain steel and aluminium imports will be extended. What happens next is anyone's guess, and no company should feel comforted. Company executives will need to stay well apprised of their cross-border transactions and take all necessary steps to mitigate the risk of border delays, import audits or North American Free Trade Agreement verifications.
Following the presidential proclamations regarding the imposition of double-digit tariffs on certain steel and aluminium imports (ie, the Section 232 tariffs), the US Customs and Border Protection (CBP) has published further guidance detailing their implementation. Given the complexity of these tariffs and the scrutiny that the CBP will be applying to imports of steel and aluminium from all countries, importers should consider compliance with these trade actions to be a high-risk area.
Before former President Obama left office in late 2016, the Department of the Treasury's Office of Foreign Assets Control (OFAC) published a list of FAQs to address the possibility of revoking the relaxed sanctions on Iran. Following President Trump's recent announcement that the United States is withdrawing from the Joint Comprehensive Plan of Action, OFAC has published new FAQs explaining how the re-imposition of sanctions will go into effect.
US Customs and Border Protection recently published guidance for claiming refunds on duty preference claims made under the Generalised System of Preferences (GSP) between the programme's expiration and the implementation date of its reauthorisation. The GSP programme promotes economic growth in developing countries by providing duty-free treatment of certain products imported from designated beneficiary countries.
Importers associated with industries where North Korean forced labour is known to be used must exert caution or be prepared to face the consequences. Failure to ensure that a company's supply chain is free from products resulting from North Korean forced labour will result in seizure and forfeiture of the prohibited merchandise, civil fines and possibly criminal prosecution.
In its first year, the Trump administration has tackled sanctions issues involving Cuba, Iran, North Korea, Russia, Sudan and Venezuela, as well as individuals involved in human rights abuses and corruption. In some cases, the result has been forced by Congress; in others, the president has 'made good' on campaign promises. Most have involved the heightened rhetoric and threats characteristic of Trump's presidency, but the rhetoric has often outpaced the actual action.
Following President Trump's recent memorandum, the Office of the United States Trade Representative has published a proposed list of Chinese products that could be subject to 25% ad valorem tariff pursuant to Section 301 of the Trade Act 1974. As expected, the list of affected tariff numbers is heavily geared towards the technology sector, including the aerospace, information and communication technology, robotics and machinery industries.
President Trump recently signed a memorandum that marks the start of a multi-faceted trade offensive against China. The memorandum is designed to respond to the administration's findings of misappropriation of US intellectual property and discriminatory technology licensing practices. In addition, the administration instructed the Treasury Department to propose restrictions on investment in the United States by Chinese-controlled entities and funds in certain industries or technologies.