The U.S. is working closely with Mexico and Canada to ensure North America has a coordinated approach to combating the pandemic caused by COVID-19, and mitigating any further spread. The United States and Canada have agreed to restrict travel at the land border to essential travel only (details regarding those travel restrictions can be found here and here). In a similar fashion, the United States and Mexico are finalizing an agreement that will facilitate only essential travel at the U.S. southern border. The three countries are maintaining cross-border activities that support health security, commerce, supply security, trade, and other essential activities, while taking prudent steps to protect citizens and to limit spread of the virus. The stated goal of these efforts is to help save lives. As such, these restrictions are in place indefinitely. Continue reading “North America, Bordered Up”
There are a bunch of other things going on when it comes to international trade, but the most concerning topic right now is the coronavirus or COVID-19. From a purely business continuity perspective, we are receiving lots of inquiries around the following question: “Can we get out of our contracts by invoking the force majeure clauses?” Such a clause allows parties to cancel contracts when events occur which are both beyond their control but also totally unexpected. A typical illustration would be an “Act of God.” First, make sure your contract includes a force majeure clause, because if not, that could present a significant uphill and costly battle. Given the widespread losses which are likely to result, it is reasonable to anticipate companies of any size will, so to speak, “stick to their guns” in trying to “spread the pain.”
Assuming such a clause is present in your contract, what does it say? An example of one recently presented includes among its examples: “… strikes, riots, floods, storms, earthquakes, fires, power failures, natural disasters, pandemics, insurrection, acts of God, or for any cause beyond the control of” the named party. Is that language sufficient to permit cancellation under the current circumstances of the COVID-19 outbreak? Probably so, since it mentions pandemics and the World Health Organization has labeled the outbreak as such, but would this language have been broad enough to cover the situation a month ago? Maybe not. Continue reading “COVID-19 and the Trade Community”
On January 31, 2020, President Trump issued Executive Order 13904 (“EO”) entitled “Ensuring Safe & Lawful E-Commerce for U.S. Consumers, Businesses, Government Supply Chains, and Intellectual Property Rights.” It begins by stating that e-commerce is “being exploited by traffickers to introduce contraband into the United States, and by foreign exporters and United States importers to avoid applicable customs duties, taxes and fees.” The types of malfeasance cited are counterfeit goods, narcotics (specifically synthetic opioids, such as fentanyl), and other contraband, plus, of course, protection of the revenue. The focus of the EO is on express consignment operators, carriers, hub facilities, international posts, customs brokers and e-commerce platform operations (the “Regulated Parties”). Anyone who participates in the “introduction or attempted introduction” of parcels containing contraband can be held accountable with accountability taking the form of both civil and criminal consequences, as appropriate. The EO goes on to state that CBP’s suspension and debarment procedure will form the framework through which these actions will be carried out. Suspension and debarment apply in the context of doing business with the government, such as government contracts, subcontracts, grants, loans and other assistance programs.
China and the U.S. signed the so-called Phase 1 deal on January 15, 2020. Much has been said in the general press and elsewhere about this deal. What does it really accomplish for international traders?
First, there is nothing said about the tariffs imposed by either the U.S. or China. White House briefers did say the tariff on the goods on List 4A would be reduced soon, and a pre-publication version of the proposed Federal Register notice was published on January 16, 2020. It can be found here. Those tariffs will be reduced from 15% to 7.5% on February 14, 2020. When it came to the tariffs China has imposed, no one has any idea what specifically will happen, only that given the commitments made by China, those tariffs will have to come down. Exactly when is anyone’s guess. Continue reading “China – U.S. Phase 1 Deal: Is It Enough?”
Clearly, there is more going on these days in Washington, D.C. than just the impeachment hearings, and activities this week made that point clear. In the span of only a few days, we saw progress on two key issues – the China 301 tariffs and the U.S.-Mexico-Canada Agreement (USMCA).
First, we saw an indefinite suspension of the List 4B 15% China tariff which was to take effect on December 15, 2019. The President tweeted about it, saying “The 25% Tariffs will remain as is with 7 1/2% put on much of the remainder…” (see here for the full text) and USTR issued a press release (see here). Regretfully, neither is very clear, beyond stating the tariff on goods on List 4B is suspended indefinitely. CBP confirmed the suspension later in the day at CSMS 40984510. There was also a Fact Sheet issued by USTR (see here), but it, too, failed to clear up the tariff impact. Continue reading “Yikes to the Year End!”
As has been widely reported, on Friday, first President Trump announced and then USTR Lighthizer confirmed the 301 tariffs on goods out of China will increase. Specifically, the tariffs on the goods on Lists 1, 2 and 3 will rise from 25% to 30% starting October 1, 2019, while the tariffs on the List 4 products will start at 15% on September 1, 2019 or December 15, 2019, rather than the original 10%, depending on whether your product is on List 4A or List 4B. USTR also acknowledged there will be a notice and comment period provided in the Federal Register notice to follow. While no doubt many American traders hope the possibility exists to remove products from any of the lists, that seems highly unlikely. While this upheaval continues, companies should also keep in mind the ability to seek exclusions for goods on List 3 expires on September 30, 2019. The exclusion process for goods on List 4 has still not been published. Continue reading “Tariff Turmoil Gets Hotter!”
While the Federal Register notice containing all the relevant details has yet to be published, today, the U.S. Trade Representative published an announcement confirming that certain unidentified products were removed from List 4 for health, safety, national security and similar reasons, and those remaining would be rolled out on two different lists with two different effective dates. List 4A will be effective September 1, 2019 and can be found here. List 4B can be found here, and will be effective on December 15, 2019. USTR notes the products on List 4B include “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.” Given the contents of List 4B, one is left to wonder whether USTR was trying to avoid making Christmas too grim for American consumers! Continue reading “China Tariff Update: List 4, Next Steps”
As has been repeatedly mentioned in the general press, President Trump tweeted on August 1st that the U.S. “will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country.” There are lots of questions about what that short message actually means, and right now, no answers. So far, there is no official notice from the U.S. Trade Representative (USTR) for publication in the Federal Register. There is nothing new posted on the USTR website. We know the President said he picked September 1st because there are goods on the water, but we do not know whether September 1st is the date by which the goods must arrive in the U.S., or must be exported from China. Will the products on List 4 change from those originally published? Whatever goods are on the final version of List 4, will at least some of the products be listed to the 10-digit level? Right now, all products are listed to the eight-digit level, but the descriptions assigned to those classifications, in some cases, do not include all the products encompassed by the very different products classified under that eight-digit number. This is typically the case due to either the type of good or its constituent material. Continue reading “The Trade War Wages On”
In the June 20, 2019 pre-publication edition of the Federal Register, the U.S. Trade Representative announced the long awaited process for seeking exclusions for goods on List 3, the one which recently went from 10% to 25%. While the exclusion process itself generally mirrors the process applied to those goods on Lists 1 and 2, there are a few differences, but let’s start at the beginning.
Putting all the hyperbole and posturing to one side, the recent agreement between Mexico and the U.S. which averted the tariffs can be found in the U.S. – Mexico Joint Statement released June 7, 2019. It consists of a few broad policy statements:
Mexico will deploy its National Guard throughout Mexico, giving priority to its southern border – meaning the border with Guatemala;
Mexico will take “decisive” action to dismantle human smuggling and trafficking organizations and their illicit financial and transportation networks;
The U.S. and Mexico will strengthen bilateral cooperation, including information sharing and coordinated actions to better “protect” and “secure” their common border;
The U.S. will immediately expand the existing Migrant Protection Protocols so that those crossing into the U.S. to seek asylum will be “rapidly” returned to Mexico where they “may” await adjudication of their asylum claims;
Mexico agrees to “authorize” the entrance of those individuals for humanitarian reasons, in compliance with its international obligations, while they await adjudication of their claims;
Mexico will offer jobs, healthcare and education to those individuals according to its principles; and
The U.S. commits to “work to accelerate” the adjudication of asylum claims and “conclude removal proceedings as expeditiously as possible.”