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USTR Considering Applying a 25% Duty Rate to Section 301 Proposed List 3Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP​

At the direction of the President, the Office of the United States Trade Representative (USTR) has announced that it is considering increasing the proposed rate of additional duty from 10% to 25% for the third proposed list of tariff items on goods from China (“List 3”) to become subject to additional duties under Section 301 of the Trade Act of 1974.

When USTR released Proposed List 3 on July 10, 2018, it indicated that covered tariff items would become subject to an additional 10% duty. Now, USTR is stating that the proposal to increase the duty rate to 25% is intended to encourage China to change its adverse trade practices that were identified in USTR’s Section 301 report.

In light of this significant proposed change, USTR has amended the time frames for commenting on Proposed List 3. Most importantly, the deadline for submitting written comments has been extended and USTR has reopened the period for requesting to appear at the public hearing. The revised schedule is as follows:

• Requests to testify at the public hearing must be filed by August 13, 2018.
• Written comments must be filed by September 5, 2018.
• The public hearing will take place August 20-23, 2018.
• Rebuttal/post-hearing comments will be due on September 5, 2018.

Parties intending to participate in the public hearing should consider submitting their comments by August 17 so that they can be reviewed by the Section 301 Committee in advance of their testimony. We anticipate that the public hearing will be extended past August 23 in light of the large number of interested parties that have already requested to appear.

Proposed List 3 covers over 6,000 tariff lines and is available at:

https://ustr.gov/sites/default/files/301/2018-0026%20China%20FRN%207-10-2018_0.pdf

We are available to discuss options for responding to these developments such as comment submissions to USTR, requests to appear at the public hearing, exclusion requests, classification reviews, and valuation strategies. If you have specific questions, please contact our office.


President Donald J. Trump Uphold AGOA Trade Preference Eligibility Criteria with Rwanda - U.S. Office of U.S. Trade Representative

Washington, D.C. – Today, President Donald J. Trump issued a proclamation regarding Rwanda that enforces the eligibility criteria established by Congress for trade preferences under the African Growth and Opportunity Act (AGOA).  This proclamation suspends the application of duty-free treatment for all apparel products from Rwanda. 

“We regret this outcome and hope it is temporary,” said Deputy United States Trade Representative C.J. Mahoney. “But if the AGOA eligibility criteria are to have any meaning, they have to be enforced—particularly where, as here, other AGOA members took action in order remain in compliance.  The President’s action today is measured and proportional.  It suspends AGOA benefits for a class of imports that totaled $1.5 million in 2017, which accounts for approximately only 3% of Rwanda’s total exports to the United States.  Rwanda remains eligible to receive non-apparel benefits available under AGOA, and the President’s action does not affect the vast majority of Rwanda’s exports to the United States.  We look forward to working with Rwanda to resolve this issue so that benefits in the apparel sector may be restored.”

When Congress first passed AGOA in 2000, it imposed certain eligibility criteria to encourage recipient countries to adopt free market-oriented development models and to ensure fair market access for United States firms.  The AGOA eligibility requirements include: “making continual progress toward establishing . . . a market-based economy . . . [and] the elimination of barriers to United States trade and investment.”  19 U.S.C. 3703(1)(A),(C).  The United States Trade Representative (USTR) is charged with enforcing AGOA’s requirements.

An AGOA issue relating to new barriers to United States trade and investment first arose in 2015 when the East African Community (EAC) established a plan to ban imports of used clothing and footwear.  The USTR’s engagement on this issue intensified in 2016 when the EAC announced it would phase in the ban by 2019.  Thereafter, three EAC AGOA beneficiaries—Kenya, Tanzania, and Uganda—worked with the United States and took actions to revise their policies.  As a result, they continue to receive full benefits under AGOA.  Unfortunately, Rwanda has insisted on keeping in place a policy that has raised tariffs on imports of used apparel and footwear by more than one thousand percent, effectively banning imports of these products.

United States efforts over the past two years to address this issue with the Government of Rwanda have been unsuccessful.  As a result, on March 29, 2018, the President determined that Rwanda was not making sufficient progress toward the elimination of barriers to United States trade and investment and was, therefore, out of compliance with AGOA’s eligibility requirements.  The President informed the Government of Rwanda of his decision in March, giving Rwanda an additional 60 days to engage with the United States to resolve this problem before the suspension of its apparel benefits under AGOA.  Rwanda has, however, continued to insist on retaining its tariffs.  The President, therefore, has decided to suspend Rwanda’s duty-free access to the United States for apparel products until Rwanda comes back into compliance with AGOA’s eligibility requirements.

The President believes suspension of AGOA’s benefits, instead of termination of Rwanda’s status as an AGOA beneficiary, is the appropriate remedy in this instance.  The Administration supports continued engagement with the aim of restoring market access for used apparel and bringing Rwanda into compliance with AGOA’s eligibility requirements.  The President can reinstate full AGOA benefits for Rwanda once he has determined that Rwanda is meeting the eligibility criteria laid out by Congress.

Background

On March 21, 2017, the Secondary Materials and Recycled Textiles Association (SMART) submitted a petition asserting that the EAC’s 2016 decision to phase in a ban on imports of used clothing and footwear imposes significant economic hardship on the United States used clothing industry and is inconsistent with the AGOA beneficiary criteria for countries to establish a market-based economy and eliminate barriers to United States trade and investment.  The petition requested an out-of-cycle review to determine whether Kenya, Rwanda, Tanzania, and Uganda – the AGOA-eligible members of the EAC – are meeting AGOA’s eligibility criteria.  In its petition, SMART estimated that 40,000 United States jobs related to the collection, processing, and distribution of used clothing and footwear would be negatively affected by the ban.  SMART also asserted that the ban would negatively affect tens of thousands of jobs in the secondhand clothing sectors in EAC countries.

The USTR accepted the SMART petition and initiated an out-of-cycle review of Rwanda, Tanzania, and Uganda’s AGOA eligibility on June 20, 2017.  A public hearing was held on July 13, 2017, in Washington D.C., at which officials from Rwanda, Tanzania, Uganda, and the EAC Secretariat testified.  The USTR determined that an out-of-cycle review of Kenya’s AGOA eligibility was not warranted due to the government’s commitment to reverse the tariff back to pre-2016 levels, effective July 1, 2017, and a commitment not to ban imports of used clothing through other policy measures.  Tanzania and Uganda made similar commitments during the course of the out-of-cycle review.

On March 29, 2018, the President determined that Rwanda was not making sufficient progress toward the elimination of barriers to United States trade and investment, and therefore was out of compliance with AGOA’s eligibility requirements.  In particular, Rwanda continued to impose prohibitive tariff rates on imports of used apparel and footwear and indicated its intent to continue to phase in a ban of these products.  As a result, the President notified Congress and the Government of Rwanda of his intent to suspend duty-free treatment for all AGOA-eligible apparel products from Rwanda after 60 days.

In order to qualify for AGOA trade benefits, partner countries must meet certain statutory eligibility requirements, including making continual progress toward establishing market-based economies, the rule of law, political pluralism, and elimination of barriers to United States trade and investment.


CBP Seizes over $2 Million Worth of Counterfeit Cartier Love Bracelets in Philadelphia - U.S. Customs & Border Protection

PHILADELPHIA – When U.S. Customs and Border Protection (CBP) officers seized 48 counterfeit Cartier Love Bracelets on Monday at the Port of Philadelphia, they proved that true love isn’t as cheap as some may hope.

CBP officers selected a shipment manifested as bracelets from Hong Kong. When the shipment was inspected for possible counterfeit merchandise, the officers found 31 Cartier Rose and Yellow Gold Bracelets and 17 Cartier White Gold Bracelets, all diamond paved. Due to the poor packaging and quality of the items, CBP officers detained the shipment for further evaluation.

Officers worked with CBP’s Consumer Products and Mass Merchandising Centers for Excellence and Expertise, the agency’s trade experts, who verified through the trademark holders that the bracelets were counterfeit.

Upon further vetting, it was discovered that the consignee had a previous shipment seized for counterfeit Cartier bracelet.

“For these CBP officers, keeping their ‘eyes on the prize’ didn’t mean finding real gold, but instead finding fool’s gold,” said Joseph Martella, CBP Port Director for the Area Port of Philadelphia. “Our expertly trained CBP officers stopped dozens of illicit consumer products from entering the United States yet again.”

CBP has designated Intellectual Property Rights enforcement as a Priority Trade Issue. Importation of counterfeit merchandise can cause significant revenue loss, damage the U.S. economy and threaten the health and safety of American people.

“American consumers and American businesses are the victims when these illicit counterfeit goods are bought or sold here in the United States,” says Casey Durst, CBP Director of Field Operations in Baltimore. “Our CBP Officers do great work interdicting counterfeit items every day, ensuring our businesses, friends, family and neighbors aren’t being taken advantage of by unscrupulous companies outside the U.S.”

Last year, CBP launched a major ad campaign – Fake Goods, Real Dangers – and a companion webpage containing information about the downsides of purchasing counterfeit goods.

CBP also collaborates with U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) and 21 other partners at the National Intellectual Property Rights Coordination Center to ensure a comprehensive response to intellectual property theft.

If you have information concerning counterfeit merchandise illegally imported into the United States, CBP encourages you to submit an anonymous report through the e-Allegations Online Trade Violation Reporting 


USITC Makes Determinations in Five-Year (Sunset) Reviews Concerning Drawn Stainless Steel Sinks from China - US International Trade Commission

The U.S. International Trade Commission (USITC) today determined that revoking the existing antidumping and countervailing duty orders on imports of drawn stainless steel sinks from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

As a result of the Commission’s affirmative determinations, the existing antidumping and countervailing duty orders on imports of this product from China will remain in place.

Chairman David S. Johanson and Commissioners Irving A. Williamson, Meredith M. Broadbent, Rhonda K. Schmidtlein, and Jason E. Kearns voted in the affirmative.

Today’s action comes under the five-year (sunset) review process required by the Uruguay Round Agreements Act.  See the attached page for background on these five-year (sunset) reviews.

The Commission’s public report Drawn Stainless Steel Sinks from China (Inv. Nos. 701-TA-489 and 731-TA-1201 (Review), USITC Publication 4810, August 2018) will contain the views of the Commission and information developed during the reviews.

The report will be available by September 4, 2018; when available, it may be accessed on the USITC website at: http://pubapps.usitc.gov/applications/publogs/qry_publication_loglist.asp.

 

BACKGROUND

The Uruguay Round Agreements Act requires the Department of Commerce to revoke an antidumping or countervailing duty order, or terminate a suspension agreement, after five years unless the Department of Commerce and the USITC determine that revoking the order or terminating the suspension agreement would be likely to lead to continuation or recurrence of dumping or subsidies (Commerce) and of material injury (USITC) within a reasonably foreseeable time.

The Commission’s institution notice in five-year reviews requests that interested parties file responses with the Commission concerning the likely effects of revoking the order under review as well as other information.  Generally within 95 days from institution, the Commission will determine whether the responses it has received reflect an adequate or inadequate level of interest in a full review.  If responses to the USITC’s notice of institution are adequate, or if other circumstances warrant a full review, the Commission conducts a full review, which includes a public hearing and issuance of questionnaires.

The Commission generally does not hold a hearing or conduct further investigative activities in expedited reviews.  Commissioners base their injury determination in expedited reviews on the facts available, including the Commission’s prior injury and review determinations, responses received to its notice of institution, data collected by staff in connection with the review, and information provided by the Department of Commerce.

The five-year (sunset) reviews concerning Drawn Stainless Steel Sinks from China were instituted on March 1, 2018.

On June 4, 2018, the Commission voted to conduct expedited reviews.  Chairman Rhonda K. Schmidtlein, Vice Chairman David S. Johanson, and Commissioners Irving A. Williamson and Meredith M. Broadbent concluded that the domestic group response for these reviews was adequate and the respondent group response was inadequate and voted for expedited reviews.  Commissioner Jason E. Kearns did not participate in these adequacy determinations.

A record of the Commission’s vote to conduct expedited reviews is available from the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.  Requests may be made by telephone by calling 202-205-1802.


TSA Statement on Passenger Screening at U.S. Airports - Transportation Security Administration

WASHINGTON – There has been no decision to eliminate passenger screening at any federalized U.S. airport. TSA remains committed to its core mission to secure the Homeland by screening more than 2.5 million airline passengers per day. Every year as part of the federal budget process TSA is asked to discuss potential operational efficiencies—this year is no different. Any potential operational changes to better allocate limited taxpayer resources are simply part of predecisional discussions and deliberations and would not take place without a risk assessment to ensure the security of the aviation system.

 

 
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