NATIONWIDE: An Introduction to International Trade: Customs

This overview is a snapshot of the opportunities and difficulties faced by United States companies doing business in the international trade community in 2022.

China Trade Enforcement – Tariffs, Forced Labor, Export Controls 

• The U.S. has prioritized trade policies focused on protecting American workers’ rights, promoting sustainable environmental practices through trade agreements, and re-aligning the U.S.-China trade relationship. Earlier this year, the Office of the U.S. Trade Representative (USTR) released its policy agenda and four-year strategic plan, testified to Congress regarding its trade agenda, and extended 352 tariff exclusions to goods subject to Section 301 duties. Later this year, the USTR is tasked with responding to the Court of International Trade’s remand of Lists 3 and 4a of the China Tariffs, as well as reviewing Lists 1 and 2 before they expire.

• The Uyghur Forced Labor Prevention Act (UFLPA), which takes effect on June 21, 2022, bans the importation of all goods made in the Xinjiang Uyghur Autonomous Region (XUAR) in China. The new law was spurred by a report by the Congressional-Executive Commission on China (CECC) in March of 2020, which described reports that linked a large variety of product lines to forced labor in XUAR, including cotton and other textiles, cell phones, computers, electronics and foodstuffs. Using the UFLPA presumption and its authority under 19 U.S.C. § 1307, U.S. Customs & Border Protection (CBP) can now seize goods it believes were made in XUAR, destroy those goods if they are not exported (absent proof of no forced labor), issue penalties against the importer, revoke import privileges and investigate and audit importers that it believes are importing goods from XUAR. The UFLPA is part of a growing trend of U.S. policy in retaliation against China’s human rights violations in the XUAR. Importers can expect future U.S. action aimed at combating forced labor practices in China, and importer due diligence requirements will parallel the heightened scrutiny of those goods. 

• The U.S. continues to target exports of electronics, software and military items exported to China. The number of Chinese individuals and companies continues to grow on the Bureau of Industry & Security’s (BIS) Entity List, Unverified List, and Military End User List under 15 C.F.R. Part 744, and on the Office of Foreign Asset Control’s (OFAC) restricted party list and Non-SDN Chinese Military-Industrial Complex Companies List.

New Sanctions against Russia in Response to the Invasion of Ukraine 

• BIS published new export control related to transfers to Russia, Belarus and Russian/Belarusian entities. These restrictions include new Commerce Control List (CCL)-based license requirements for Russia, a review policy of denial to license applications for exports, reexports to, or transfers within Russia, prohibit exports of all items subject to the EAR if, at the time of the export, reexport, or transfer (in-country), the person has knowledge that the item is intended for a military end use or military end user in Russia, the addition of two new Foreign Direct Products Rules specific to Russia and Russian Military End Users and the addition of over 100 Russian and Belarusian entities to restricted lists. 

• The U.S. banned the importation of several categories of products from Russia, including oil, gas, petroleum, coal products, fish, seafood, alcohol and non-industrial diamonds. The U.S. also bans the export of certain luxury goods to Russia, which include perfumes, clothes, leathers, cars and jewelry. 

• The President issued Executive Order 14024, which resulted in several Directives by the Department of Treasury that banned transactions with most Russian financial institutions. In general, the Directives published by OFAC prohibit U.S. persons and entities from engaging in certain transactions with the listed Russian banks and financial institutions, which make up over 80% of Russia’s financial sector. Directive 3 prohibits “new debt or new equity” of longer than 14 days maturity for transactions entered into after March 26, 2022, from Russia’s largest banks and lending institutions, which are listed in the Directive. Directive 4 prohibits all transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation. For other restrictions on bonds, sovereign debt, payable-through accounts and other financial related restrictions for Russian entities, see Directive 1A and Directive 2 pursuant to E.O. 14024.

Enforcement of Antidumping and Countervailing Duties 

• Earlier this year, the U.S. Department of Commerce published its new regulations regarding Antidumping & Countervailing Duty (AD/CVD) investigations. These new rules affect how Commerce addresses scope rulings, circumvention inquiries, merchandise referrals from Customs as part of evasion investigations, and evaluations during new shipper reviews. The regulations are the first overhaul of the AD/CVD rules since 1993 and give Commerce new authorities to calculate and impose AD/CVD. 

• CBP has prioritized enforcement of AD/CVD. The agency is frequently conducting investigations specifically focused on the evasion of AD/CVD, which is derived from the Enforce and Protect Act (EAPA) of 2016. The EAPA allows CBP to impose interim measures within the first 90 days of an investigation, which include (1) suspending the liquidation of each unliquidated entry, (2) extending the period for liquidating each unliquidated entry, and (3) any other measures as CBP determines are necessary to protect the revenue, including requiring a single transaction bond or cash deposit. After an EAPA determination, CBP can suspend liquidation, extend liquidation, and demand the evaded AD/CVD pursuant to 19 CFR 165.28. Further, 19 CFR 165.47 allows CBP to issue civil penalties under authorities other than the EAPA, such as 19 U.S.C. § 1592. Under the EAPA, CBP has initiated over 100 investigations.

Conclusion 

Companies importing to or exporting from the United States should be aware of the various import restrictions, tariffs, export controls and party restrictions that are part of doing business in the country.